Inflation and recession jitters haven't quelled Americans' spending

Here’s a hint about why inflation remained stubbornly high in January: Americans’ spending accelerated, after a few months of trending down.

Driving the news: Personal consumption expenditures data, out Friday, shows that even after adjusting for inflation, spending rose 1.1% in January from the month before.

  • That’s the biggest monthly percentage increase since March 2021 — during peak reopening fervor.

Why it matters: The Fed’s been hard at work trying to quell demand in its battle against inflation. But these figures imply that consumers, on the whole, aren’t exactly getting the message.

  • The impact: The growing prospect that the Fed may have to raise rates more aggressively than investors had hoped just a few months ago propelled Treasury yields higher on Friday, while the S&P 500 shed over 1%.

Go deeper: Painless disinflation is looking less likely

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