Consumer Spending
Gene J. Puskar/AP
By Lucia Mutikani

WASHINGTON -- U.S. consumer spending rose in February, in the latest sign that the economy was regaining strength after being chilled by bad weather.

The Commerce Department said Friday that consumer spending increased 0.3 percent last month after rising by a revised 0.2 percent in January. Spending was previously reported to have increased 0.4 percent in January.

Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, rising 0.3 percent in February.

The dollar rose to a session high against the yen after the data. U.S. stock index futures were little changed.

Spending in February was lifted by an increase in services consumption, likely because of increased demand for health care and utilities.

When adjusted for inflation, consumer spending rose 0.2 percent in February after gaining 0.1 percent in January.

This so-called real spending measure goes into the calculation of gross domestic product. Consumer spending rose at its fastest pace in three years in the fourth quarter,
helping to lift economic growth to an annualized pace of 2.6 percent during the period.

A combination of bad weather, a slow pace of inventory accumulation by businesses, the expiration of long-term unemployment benefits and cuts to food stamps is expected to hold back growth to around a 2 percent rate in the first quarter. But a rebound is expected as these factors fade.

Income rose 0.3 percent last month after rising by the same margin in January. It continues to be supported by government transfers for healthcare payments.

Income at the disposal of households after adjusting for inflation rose 0.3 percent. The saving rate, which is the percentage of disposable income households are socking away, rose to 4.3 percent last month from 4.2 percent in January.

There were few signs of inflation pressure in February. A price index for consumer spending edged up 0.1 percent for a second straight month in February.

Prices in February rose 0.9 percent from a year ago, compared to a 1.2 percent advance in January over the previous 12 months. February's increase was the smallest since October.

Excluding food and energy, the price index for consumer spending rose 0.1 percent for an eighth straight month. Core prices were up 1.1 percent from a year ago, after rising by the same margin in January.

Both inflation measures remain stuck below the Federal Reserve's 2 percent target. That suggests the Fed, which is expected to wrap up its monthly bond purchases by the end of 2014, will only gradually raise interest rates when it starts tightening monetary policy.


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gildersleeve9

Yea, rose from being gouged for heating fuels. This year I spent 2x the amount I normally would along with my state. My home is heavily insulated and very efficient. Hey, energy prices will rise which will make alternative energy even worth a damn. Believe our Potus said something to that effect which nobody cared. Politics is only a popularity contest. Ever wonder why they have a PR team?

March 28 2014 at 7:35 PM Report abuse rate up rate down Reply