Personal Income, Spending Up in February
U.S. personal spending rose for the fifth consecutive month in February, and consumer confidence unexpectedly climbed in March, suggesting the economy would continue to grow.
Americans’ spending last month rose 0.2% after a 0.5% gain in January that was larger than first estimated, the Commerce Department reported Friday. Personal incomes climbed 0.4%, the most since November, and the University of Michigan said its March sentiment index rose from a preliminary reading two weeks ago.
Consumer confidence unexpectedly jumped to 95.8 in the university’s index from a reading of 94.1 earlier this month and from 94.4 in February.
The sentiment gauge, which is based on a survey of 500 households, found that assessments of current conditions and the economic outlook strengthened from two weeks ago and from last month.
The increase in confidence stemmed from rising incomes and low mortgage rates and came “despite persistent concerns about slower job growth and higher gas prices,” said Richard Curtin, director of the Michigan survey.
Election-year debates about how to create jobs amid rising productivity and the movement of work overseas will keep “consumers’ anxiety at high levels,” Curtin said. The latest survey “found the lowest level of confidence in government economic policies since President Bush was first elected,” he said.
The Commerce Department’s measure of inflation tied to spending, the personal consumption expenditure price index, climbed 0.2% last month.
The index excluding volatile food and energy prices, a gauge followed by Federal Reserve Chairman Alan Greenspan and other policymakers, edged up 0.1% last month, capping a 1.1% rise since February 2003. The increase over the last 12 months compared with a 0.8% year-over-year gain in December -- that matched the lowest level since record keeping began in 1960.
The Commerce Department also said disposable income, or the money left after taxes, increased 0.4% in February after a 0.9% increase the previous month. Wages and salaries climbed 0.5% after gaining 0.7%.
