Real Disposable Incomes in U.S. Increase Most Since 2005

Americans’ wallets fattened in January by the most in five years on the recent tax cuts, indicating increased spending power may boost the economy this quarter.

Real disposable income, or earnings adjusted for taxes and inflation, advanced 0.6 percent from the prior month, the biggest gain since April 2015, according to a Commerce Department report March 1. Nominal consumer spending grew 0.2 percent, matching the median forecast in a Bloomberg survey and following a 0.4 percent gain. The Federal Reserve’s preferred price gauge, excluding food and energy, had the biggest monthly increase in a year.

The data, covering the first ...