U.S. consumer spending barely rose in January as households cut back on purchases of a range of goods, suggesting the economy started the first quarter on a softer note.
Sluggish spending came despite cheap gasoline and a buoyant labor market, leaving economists to speculate that consumers were using the extra income to pay down debt and boost savings.
“There is a risk of a temporary soft patch for the economy as it is somewhat surprising the consumer has stopped spending their savings from gasoline prices,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.
The Commerce Department said on Thursday retail sales excluding automobiles, gasoline, building materials and food services edged up 0.1 percent last month.
That followed a 0.3 percent drop in December and was below Wall Street’s expectations for a 0.4 percent increase.
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