Wall Street Journal (03/02/15) Kate Davidson

U.S. consumer spending declined in January for the second consecutive month. Personal spending fell a seasonally adjusted 0.2%, according to the U.S. Department of Commerce, but spending rose 0.3% after adjusting for inflation, due in part to higher incomes as more people return to the workforce. Disposable income rose sharply, and economists say low inflation should boost spending power, particularly given the accelerating wage gains in a tightening labor market. Thanks to lower gasoline prices, people are saving at a higher rate, which could give them the resources to increase spending later in the year even if gas prices increase.

“Improving labor-market conditions will be a far more important driver of growth in consumer spending in 2015 than retail gasoline prices,” says Richard Moody, chief economist for Regions Financial Corp.

The price index for personal consumption expenditures declined 0.5% from December and is down 0.2% from a year ago. Excluding energy and food, core prices rose 1.3% in January from a year ago.