Consumer Spending Up Five Straight Months

By:: Peter King | March 29, 2010

Consumer spending rose in February for the fifth consecutive month, though at a somewhat lower rate than in previous months, the Commerce Department reported today.

Personal consumption expenditures were up 0.3 percent in February, which matched economist’s predictions. In absolute terms, the rate was down slightly from January’s increase of 0.4 percent and represented a cooling off from increases of 0.6 percent and 0.5 percent in October and November, respectively.

The picture is somewhat more encouraging when adjusted for inflation, which produces a 0.3 percent gain in February, up from 0.2 percent in both December and January, and matching increases of 0.3 percent in October and November.

Februrary’s increases came despite incomes that remained nearly flat, rising a mere $1.2 billion nationally, or less than 0.1 percent. Combined with increased spending, that pushed the personal savings rate down to 3.1 percent of incomes, down from 3.4 percent in January.

Incomes have been slowly increasing every month since last August, bringing consumer spending along with it. February’s increase in personal expenditures was the ninth increase in spending in the past 10 months.

Private-sector wages and salaries were stagnant in February, up only $1.9 billion, an increase of 0.04 percent, compared to a January gain of $16.6 billion, or 0.3 percent. Wages were down in goods-producing industries and manufacturing, while up in service-providing industries, following January increases in all three.

The overall picture shows the economy is improving, although slowly. The Commerce Department reported last week that the economy grew at a rate of 5.6 percent in the last quarter of 2009, the biggest increase in six years, but economists project the rate for the first quarter of 2010 will be less than half of that.

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