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% from the prior month, the biggest gain since December 2012, according to a Commerce Department report on Thursday, March 1. Nominal consumer spending grew 0.2%, matching the median forecast in a Bloomberg survey and following a 0.4% 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 month since the tax law was signed in December, reflected a $30 billion increase in one-time bonuses and a $115.5 billion annualized drop in personal taxes, the Commerce Department said. Such boosts to Americans' wallets, along with a tight labor market, will sustain spending. Those items, plus rising prices, are likely to keep Fed policy makers on track for at least three interest-rate increases this year, including one that's widely expected later in March.

A separate Labor Department report on Thursday showed weekly filings for unemployment benefits fell to the lowest level since 1969.

The reduction in taxes helped boost the saving rate to 3.2%, the highest since August, from 2.5% in December, which was the lowest since 2007.