Navigation
Suscribe
Menu Search Facebook Twitter
Search Close
Menu ALL SECTIONS
  • Capital Coahuila
  • Capital Hidalgo
  • Capital Jalisco
  • Capital Morelos
  • Capital Oaxaca
  • Capital Puebla
  • Capital Quintana Roo
  • Capital Querétaro
  • Capital Veracruz
  • Capital México
  • Capital Michoacán
  • Capital Mujer
  • Reporte Índigo
  • Estadio Deportes
  • The News
  • Efekto
  • Diario DF
  • Capital Edo. de Méx.
  • Green TV
  • Revista Cambio
Radio Capital
Pirata FM
Capital Máxima
Capital FM
Digital
Prensa
Radio
TV
X
Newsletter
Facebook Twitter
X Welcome! Subscribe to our newsletter and receive news, data, statistical and exclusive promotions for subscribers
Business

U.S. Consumer Spending up Tiny 0.1 Percent in February

Incomes, however, were up a solid 0.4 percent in February, offering hope for stronger consumer spending in the months ahead

Sept. 28, 2016, a customer buys lunch at Smolak Farms, in North Andover, Massachusetts U.S. consumers increased their spending at the weakest pace in six months, while the 12-month rise in consumer prices was the largest in nearly five years, photo: AP/Elise Amendola
5 months ago

WASHINGTON – U.S. consumers increased their spending at the weakest pace in six months, while the 12-month rise in consumer prices was the largest in nearly five years.

Consumer spending edged up 0.1 percent in February following a similarly sluggish 0.2 percent increase in January, the Commerce Department reported Friday. The small gains suggest that overall economic growth likely slowed in the first quarter.

Incomes, however, were up a solid 0.4 percent in February, offering hope for stronger consumer spending in the months ahead.

Meanwhile, an inflation gauge closely watched by the Federal Reserve increased 2.1 percent in February compared to a year ago. It is the sharpest 12-month rise since March 2012 and slightly above the Fed’s 2 percent inflation target.

The Fed raised a key interest rate in March, just three months after a hike in December. Officials have sent signals that the pace of rate hikes will accelerate this year after seven years of stagnant rates at a record low near zero. In the last two years, the Fed nudged rates up just one time in each of those years.

The overall economy grew at a 2.1 percent rate in the October-December quarter, supported by a strong gain in consumer spending.

Jan. 11, 2017, an H&M store window advertises a sale, in New York. On Friday, March 31, 2017, the Commerce Department issues its February report on consumer spending, which accounts for roughly 70 percent of U.S. economic activity. Photo: AP/Mark Lennihan

But with the recent weakness in spending, which accounts for 70 percent of economic activity, many analysts believe growth in the January-March quarter could slow to a rate of 1.5 percent or less before accelerating in the months ahead.

“Consumer spending is likely to pick up in March and the second quarter due to a sudden surge in tax refunds in the latter half of February, elevated levels of consumer mood, strong stock market performance, rising employment and disposable income and household wealth,” predicted Chris G. Christopher Jr., director of consumer economics at HIS Markit.

Many economists expect the economy will accelerate later this year to rates around 2.5 percent or more if President Donald Trump is successful in winning approval for his economic stimulus package, which includes tax cuts, infrastructure spending increases and deregulation.

Another reason for the optimistic spending outlook is the recent surge in consumer confidence, which by the Conference Board’s measure hit a 16-year high in March.

The February spending figure reflected in part an unusually mild winter, which sapped demand for utilities. Services, the category that covers utility payments, was up just 0.1 percent. Spending on goods was also weak, with purchases of long-lasting durable goods such as autos down 0.1 percent. Nondurable goods spending showed no change.

The combination of a strong gain in incomes and modest rise in spending pushed the saving rate up to 5.6 percent of after-tax income in February, the highest level since October and up from 5.4 percent in January.

MARTIN CRUTSINGER

Comments Whatsapp Twitter Facebook Share
More From The News
Business

Global Stocks Slip as Investors Digest C ...

1 hour ago
World

One Million South Sudan Refugees Now in ...

2 hours ago
World

U.S.: War Would be 'Horrific' but N. Kor ...

2 hours ago
Sports

Card Me: First Female Ref Set for German ...

2 hours ago
Most Popular

Defiant Trump Again Blames 'Both Sides' ...

By The Associated Press
World

A Chronicle of Nota Roja in Mexico

By Guillermo Verduzco
Living

Global Stocks Slip as Investors Digest C ...

By The Associated Press
Business

Israeli Leader Criticized for Response t ...

By The Associated Press
World

Young Leaders of Massive 2014 Hong Kong ...

By The Associated Press
World