Even as personal and disposable income of U.S. consumers show an upward tick, shoppers tightened their purse strings in January, according to the latest data from the U.S. Department of Commerce’s Bureau of Economic Analysis.
The bureau said Monday that personal income in January increased by $50.8 billion — a 0.3 percent gain from the preceding month — while disposable income grew by $52.6 billion, which is a 0.4 percent increase. This follows a 0.3 percent increase in personal income and in disposable income for December 2014 from the preceding month. But personal consumption expenditures fell $18.9 billion, or 0.2 percent, in January, which follows a 0.3 percent decline in December.
Harsh weather across most of the U.S. in January might be to blame for the pullback. The good news is that personal savings jumped to $728.5 billion in January, which compares with $659.6 billion in December. The bureau noted that the personal saving rate, which is personal savings as a percentage of disposable income, rose to 5.5 percent in the month. In December, the rate was 5 percent.
For retailers, the challenge is going to be to unlock the pent-up savings and get shoppers back into stores and spending money.