Consumer spending rebounds in January

U.S. consumer spending increased in January by the most in seven months as the government gave out more pandemic relief money to low-income households and new covid-19 infections dropped, setting the economy up for faster growth in the first quarter.

Despite the strong rebound in consumer spending reported by the Commerce Department on Friday, price pressures were muted. Inflation is being closely watched amid concerns in some quarters that President Biden’s proposed $1.9 trillion covid-19 recovery package could cause the economy to overheat.

The plan, being considered by Congress, would be on top of a rescue package worth nearly $900 billion approved by the government in late December. Federal Reserve Chair Jerome H. Powell has played down the inflation fears, citing three decades of lower and stable prices.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 2.4 percent in January. That was the biggest gain since June and came after two straight months of declines. Personal income shot up by 10 percent, the largest increase since April, after rising 0.6 percent in December.

Consumers bought motor vehicles, recreation goods, food and beverages. They also boosted spending on services such as hotel accommodations and restaurants, as well as doctor visits.

Economists polled by Reuters had forecast consumer spending rebounding by 2.5 percent in January and income accelerating by 9.5 percent.

Further gains in consumer spending are likely, though winter storms, which wreaked havoc in Texas and other parts of the densely populated South this month, could slow momentum.

— Reuters


IMF, World Bank pledge climate focus

The leaders of the International Monetary Fund and the World Bank on Friday vowed to step up efforts to combat climate change by looking more closely at climate-related financial stability risk and using other tools at their disposal.

World Bank President David Malpass told finance officials from the Group of 20 economies that the bank, the biggest provider of climate finance to the developing world, would make record climate investments for a second consecutive year in 2021.

To get more bang for the buck in mitigation and adaptation, the World Bank is helping countries update their commitments or “nationally determined commitments” under the Paris climate accord, he said during a videoconference.

The bank also is launching reviews to integrate climate into all of its country diagnostics and strategies, Malpass said, with an initial focus on developing countries with the largest carbon emissions and the largest populations vulnerable to climate change.

He said the bank would work with the IMF and others on the reviews and planned to complete up to 25 reviews over the next year.

IMF Managing Director Kristalina Georgieva told G-20 officials that she strongly supported a proposal by Italy, which is leading the G-20 this year, on global climate risks and environmental taxation.

“We will play our part in the areas . . . such as integrating climate in public revenues and spending policies, climate-related financial stability risks and data,” she said.

Georgieva said last month that climate change posed a fundamental risk to economic and financial stability.

— Reuters

Also in Business

DoorDash reported fourth-quarter revenue that beat analysts' estimates, reflecting a surge in covid-19 cases and restrictions that fueled demand for food delivery at the end of last year. But the company said price controls intended to limit the fees it can charge restaurants will weigh on results in the current period. Although DoorDash helped many restaurants stay afloat as pandemic shutdowns forced them into a takeout-only model, the fees that it charges, which can be as much as 30 percent, have been limited by jurisdictions including New York and Seattle.

Cooper Tire & Rubber is recalling more than 430,000 light-truck tires in the United States because they can develop sidewall bulges that could lead to tire failure. The recall covers certain Discoverer, Evolution, Courser, Deegan, Adventurer, Hercules, Back Country, Multi-Mile, Wild Country and Big O tires in several sizes. The company says in documents posted Friday by U.S. safety regulators that the bulges can cause a sidewall separation.

— From news services