Personal Income Up 1% in February

Americans’ personal income shot up 1% last month while consumer spending advanced at a more restrained pace, boosting the savings rate to its highest level in nearly three years, the government said Friday.

Personal income, bolstered by strong growth in employment and wages, rose to a seasonally adjusted annual rate of $4.32 trillion last month after surging 1.7% in January, the Commerce Department reported.

But when it comes to spending that money, consumers have been showing more restraint. Personal consumption expenditures rose 0.5% in February to an annual rate of $3.88 trillion after advancing 0.4% in January.

“The consumer is still getting a lot of dollars placed in his wallet,” said Robert Dederick, chief economist at Northern Trust Co. in Chicago. “But when it came to spending, consumers suddenly have decided this income is not going to be disbursed as lavishly as it has been.”

The uneven advances in income and spending resulted in a healthy jump in the personal savings rate--savings as a percentage of after-tax income--to 5.9% from 5.4% in the previous month.

February’s rate matched the savings level set in April, 1986, and hasn’t been surpassed since May, 1985, when the rate was 6.4%.

Economy Shows Strength

The U.S. savings rate has been much lower than that of most other industrialized nations. Last year it rose to 4.2% from a 40-year low of 3.2% in 1987.

Analysts said the latest report on personal income and spending demonstrated that the economy continued to show strength last month.