Covid, inflation and a loss of aid crimped American incomes in January.

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Soaring coronavirus caseloads, rising prices and a falloff in government aid combined to take a bite out of Americans’ incomes in January.

After-tax income rose just 0.1 percent last month, the Commerce Department said Friday. That was the slowest growth since June. Adjusted for inflation, after-tax income fell 0.5 percent, the sixth consecutive monthly decline.

Incomes were affected by the spike in coronavirus cases associated with the Omicron variant, which kept millions of employees home from work in January. Earlier data from the Labor Department showed that total hours worked fell early in the month, despite continued job growth.

January was also the first month since mid-2021 in which parents did not receive payments under the expanded child tax credit, which expired at the end of last year. Income from government programs fell 1.3 percent last month.

Yet despite the crimp in incomes, Americans continued to spend. Consumer spending rose 2.1 percent in January. Even after adjusting for inflation, spending was up 1.5 percent.

Spending on goods was particularly strong, continuing the pandemic-era pattern that has put pressure on global supply chains. But spending on services also rose modestly, suggesting that the Omicron wave did not derail the recovery on the services side of the economy.


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