Consumer spending barely increased in February as bad weather kept many shoppers in their homes -- and particularly out of auto showrooms -- despite another solid increase in incomes.
Overall spending increased just 0.1%, the Commerce Department said Monday. The increase was an improvement over a 0.2% drop in January caused by the steep decline in energy prices.
With gas prices rising in February, economists had expected consumer spending to rebound, and the 0.1% rise was the first monthly increase since November.
But February's spending was below analysts' expectations for a 0.2% increase even though personal income rose 0.4%, which was more than forecast. In January, income also rose 0.4%.
Instead of spending, consumers in February saved at their highest rate since 2012.
When adjusted for inflation, so-called real spending declined 0.1% in February after a 0.2% increase the previous month. The drop in real consumer spending was the first since April.
Economists said severe winter weather in the Northeast probably was the culprit in February's disappointing spending data.
"It looks like [consumers] are waiting for spring, as they continue to bank almost all their paychecks during this cold winter where most did not venture outside," said Chris Rupkey, chief financial economist at Union Bank in New York.
The savings rate rose to 5.8% in February, compared with 5.5% the previous month. The rate averaged 4.5% last fall.
"One thing’s for certain, the consumer has substantial firepower and is likely to go on quite a shopping spree in coming months as the economy thaws and we move into spring," Rupkey said.
Prices rose 0.2% in February after decreasing 0.4% the previous month. An increase in gas prices in February helped drive up overall prices.
Still, after months of falling oil prices, the annual inflation rate remained low at 0.3%. The Federal Reserve wants inflation to be 2% annually.
Excluding volatile energy and food prices, inflation was 1.4% for the 12 months ended Feb. 28.
February's sluggish consumer spending largely was caused by a 1% decrease in purchases of long-lasting durable goods, mostly automobiles and parts, the Commerce Department said.
"The decline in auto sales, previously signaled by data from the automakers, seems to have been mostly a weather hit," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "Auto industry analysts expect a robust March rebound."
But the weak consumer spending so far this year does not bode well for first-quarter economic growth, which many economists already had forecast would be less than 2% because of bad weather. Growth in last year's final quarter was 2.2%.
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