U.S. consumers increased spending in February as
incomes increased for the second straight month. But consumer sentiment slipped
a bit in the latest Thomson Reuters/University of Michigan survey. The survey
showed consumer sentiment index dipped to 80.0 in March from
81.6 in February. It was little changed from a preliminary reading earlier this
month.
The increase in spending offers hope the economy
was regaining its footing after being slammed by an unusually cold winter. The
Commerce Department report released on Friday took the sting out of a separate
report that showed consumer sentiment dipped in March. Economists said they
expected household morale to perk up with warmer weather in the spring.
Consumer
spending rose 0.3 percent last month after a downwardly revised gain of 0.2
percent in January. A combination of bad weather, an effort by business to work
off bloated inventories, the expiration of long-term unemployment benefits and
cuts to food stamps is expected to hold back growth to around a 1.5 percent
annual pace in the first quarter.
But
a rebound is expected as those factors fade. The economy grew at a 2.6 percent
rate in the fourth quarter. Consumer spending, which accounts for more than
two-thirds of U.S. economic activity, was bolstered by a rise in outlays for
services, likely because of higher demand for health care and utilities.
Income
rose 0.3 percent last month after rising by the same margin in January. It
continues to be supported by government transfers for healthcare payments,
which offset the drag from the expiration of the long-term unemployment
benefits.
The
saving rate, which is the percentage of disposable income households are socking
away, rose to 4.3 percent from 4.2 percent in January.
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