(CN) — Consumers appear to have adopted an attitude of “I’ll believe it when it see it” in January, spending more but at a slower rate than the previous two months, despite GOP promises of larger paychecks thanks to last year’s federal tax cut, the Commerce Department said Thursday.
The report from the Commerce Department’s Bureau of Economic Analysis said spending rose 0.2 percent in January, about half the rate of spending increases in November and December.
The bump in spending came as after-tax income for most Americans jumped 0.9 percent — the most in a year.
If the spending increase was modest, savings rate rose in January after having fallen to a 12-year low in December, the government said.
There were some signs of inflation pressures. A key inflation gauge that excludes the volatile food and energy categories rose 0.3 percent, the most in a year and matching January 2017’s gain. The last time core prices rose faster was in January 2007.
Overall, the economy and job market are mostly healthy. The number of Americans seeking unemployment benefits fell last week to 210,000, the lowest level in 48 years, the Labor Department said Thursday. That is a sign that employers anticipate solid growth and want to hold onto their staffs.
In a separate report, the Commerce Department said spending on U.S. construction projects was unchanged in January, held back by a sharp fall in commercial real estate building.
The department said spending on the construction of single-family homes rose 0.6 percent, while apartment building fell. Construction of commercial projects, such as office towers and malls, fell 2.7 percent. Construction spending on new power plants plunged 6.2 percent.
Construction spending rose in 2017 at the slowest pace in six years, as homebuilders have struggled to find enough workers and enough cheap land to build on. Total private construction fell 0.5 percent in January.
States and the federal government have made up for some of the decline, increasing their construction spending 1.8 percent in January. Highway and road building, and construction of schools, rose at a healthy clip.