Personal income and consumer spending both declined in February as a result of brutal winter weather which shutdown much of the nation during the end of the month, along with a dropoff from stimulus checks from January. 

The report released from the Bureau of Labor Analysis showed a personal income decline of 7.1%. This steep decline was expected as a result of the federal aid most Americans received from the $600 stimulus checks from the final COVID-19 stimulus package passed during the Trump administration. 

The 1.0% decline in consumer spending was mostly generated by severe winter storms that shut down much of Texas and the rest of the nation towards the end of February. 

Better weather is expected to help sectors rebound in manufacturing, construction and homebuilding. This, along with indicators showing steady growth within travel and hospitality has economists optimistic about the economy moving forward. All of this with more Americans getting vaccinated, communities beginning to loosen restrictions, and more stimulus help on the way. 

“What we have seen the past two months sets up for tremendous economic growth for the year to come,” says James Knightly, chief international economist with ING Financial Markets.

Optimism is rooted in the savings Americans have accumulated the past year. In February the savings rate was 13.6%, the 12th consecutive month of over 10%. 

“The savings that we have seen have been astronomical in the last year, and as more people get vaccinated and feel safe they are going to start spending more on services like restaurants and travel,” says Knightly. 

Hospitality and recreation sectors are experiencing a strong resurgence as states and local governments draw back some COVID-19 restrictions and vaccinations increase. The past year has seen most avoiding large expenditure on services such as trips, many expect that to change moving forward into the summer. 

“I think we could see a savings rate as high as 30% next month, with the stimulus coming in,” says Michael Englund, chief economist with Action Economics. Englund thinks moving forward that the spike in savings will continue, but with more confidence in the economy, Americans will be willing to spend what they have saved the past year. 

The reopening of schools is also welcome news to many consumers. Hadley Delong, a middle school teacher from Wake Forest, NC, has been able to maintain her teaching income the last 12 months, but she lost supplemental income from coaching lacrosse during the spring and summer. That money typically serves as her disposable income. 

“The coaching makes up for about a quarter of my income throughout the year. Not having that last year was brutal,” said Delong. But as schools reopen, youth sports leagues have followed. Delong is getting married in September and plans to save most of her coaching income instead of spending it. 

But with Americans facing uncertainty as a result of the pandemic, they were more inclined to save. With added income from government aid, along with more Americans being vaccinated, economists expect that with confidence restored in the handling of the pandemic, will lead to increased spending. 

“Unlike in January, the next round of stimulus will have a much larger population that is vaccinated and ready to actively participate in the economy,” says Scott Brown, Chief Economist for Raymond James. 

Some consumers are already doing just that. Delong, who recently received her second vaccination shot, acknowledged that she has been dining out more since getting vaccinated. 

While she doesn’t plan on traveling this spring, many of her players are doing so as their schools go on spring break over the next few weeks. “In the past, our players are home for practice and games during their school breaks. But this year so many of their families are taking trips.” 

In the last fourteen days, TSA reported over 1,000,000 travelers per day through March 25, a first since the pandemic began more than a year ago. With more Americans feeling safe, the expectation is that they will use some of what they saved during the pandemic in the coming months.