Americans saved their extra money from the recent tax overhaul rather than spending it, which The Wall Street Journal says potentially thwarted growth in the first quarter.
Consumer spending rose at a disappointing rate for the second month in a row in February despite personal income rising 0.4 percent.
At the same time, expenditures rose just 0.2 percent, the newspaper reported, down from 0.5 percent increase in December and a 0.7 percent increase in November.
U.S. auto sales fell 2 percent in February, the Associated Press reported.
“Consumers are dialing back on their spending spree of last year,” Robert Frick, corporate economist with Navy Federal Credit Union, told The Wall Street Journal. “Americans may be feeling stretched by the credit they took on last year and are putting more money into savings.”
February was also an up-and-down month for stocks — the Dow Jones Industrial Average fell about 4 percent, breaking a 10-month winning streak and possibly affecting confidence and the willingness to spend, according to the WSJ.
Still, many economists believe households have a solid financial foundation on which to keep spending. Unemployment has been at a low 4.1 percent for the past five months.
Many Americans recently saw the tangible impact of the $1.5 trillion tax cut that President Donald Trump signed into law late last year, causing tax withholdings to fall and increasing take-home pay.