Utilities took a bigger bite out of consumer spending in January
Cold weather and higher natural gas prices raised household costs, particularly stressing the budgets of lower-income families.

U.S. consumer spending slid on everything from cars to clothing in January, which makes sense after the holidays. But one category went up 29%, according to the Department of Commerce. That’s housing and utilities, which has been a pain point for lower-income consumers in particular.
January spending is often about essentials, said Morning Consult’s Deni Koenhemsi. But utilities are subject to the weather.
“We’ve had really cold temperatures on the southern United States and East Coast,” said Koenhemsi.
Like snow in Houston. And the cold has a double whammy effect on utilities, especially for natural gas-heated homes, said David Tinsley with Bank of America Institute.
“You’ve got the price of gas rising, but they also have to burn more gas in order to counter this unseasonably cold weather,” said Tinsley.
His review of electricity, gas and water payments showed a 6% year-on-year increase in January. But different households are feeling the pinch differently. While richer people pay more for utilities — they often have bigger homes — they don’t pay a ton more than people who are poorer.
“It’s certainly tougher for people at the lower, lower end of the income distribution,” said Tinsley.
That leads some families to make drastic decisions, according to a survey by the Texas Energy Poverty Research Institute.
“A very high percentage of people leave their thermostats or their air conditioning at uncomfortable temperatures or even turn it off completely because of the fear of being shut off,” said Margo Weisz, executive director of the Texas Energy Poverty Research Institute.
She said households have also given up entertainment, medicine and school supplies to pay their energy bills.