Consumer Spending Unchanged in January

Americans bought fewer cars and new homes in January, suggesting the U.S. economy will get less of a boost from consumers in the first quarter.

Consumer spending was unchanged after December’s 0.8% rise, the Commerce Department said Monday. Separately, the department reported new-home sales unexpectedly declined 9.2% to a 1.11 million annual rate in January.

Corporate spending may help pick up the slack. A gauge of manufacturing and other business in the Chicago area showed faster growth this month, the National Assn. of Purchasing Management-Chicago said Monday.

Consumer spending rose through the 2001 recession as corporate purchases fell. In the last half of 2004, business investment grew the fastest since 1997.

“The baton has been passed,” said Richard DeKaser, chief economist at National City Corp. in Cleveland. “Consumers are no longer playing the lead role that they did in the economy.”

The purchasing managers index unexpectedly rose to 62.7 in February from 62.4 in January. Numbers higher than 50 indicate growth.

More people are working and that’s boosting wages and salaries, which rose 0.6% in January, the most since July, the Commerce Department’s data showed.

A drop in new vehicle sales in January from a month earlier, as automakers reduced discounts, held down spending. Consumer purchases fell 0.2% after a 0.9% rise when adjusted for changes in prices, the government reported.

Still, with wages rising as employment rebounds above pre- recession levels, spending will contribute to first-quarter growth, economists said.