US consumer spending expected to show slight slip in January with rebound coming

Economic Indicators Associated Press

The Commerce Department releases its January report on consumer spending Monday at 8:30 a.m. Eastern.

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FURTHER SLIP: The expectation is that consumer spending, which accounts for 70 percent of U.S. economic activity, dipped a slight 0.1 percent in January, according to a survey of economists by data firm FactSet.

REBOUND COMING: In December, U.S. consumer spending dropped 0.3 percent as the pace of motor vehicle sales slowed and more Americans tucked money away.

Some economists believe a decline in January would be more of a reflection of plunging energy prices. Those declines are expected to translate into spending elsewhere in coming months as Americans use the money they would have spent on gasoline to buy other things.

The January report will be the first look at consumer spending for the first quarter of this year. Economists will be paying especially close attention to get a sense of how 2015 is starting off.

The government last week revised its estimate for overall economic growth as measured by the gross domestic product to a slower pace of 2.2 percent in the October-December quarter, down from an initial estimate of 2.6 percent growth in the fourth quarter.

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The downward revision reflected less spending by businesses to restock their inventories and a bigger trade deficit than initially estimated. Consumer spending remained strong during the fourth quarter, rising at an annual rate of 4.2 percent. That was the best showing since early 2006.

Economists believe the overall growth this year will top 3 percent, the best performance in a decade. That optimism is based on a belief that a stronger job market will boost incomes and that will in turn support solid gains in consumer spending.