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Consumer spending and income both rise weakly
From wire reports
WASHINGTON — Consumer spending, which had soared because of unusually warm weather in January, slowed sharply in February while Americans' incomes grew by the smallest amount in three months.
The Commerce Department said Friday that personal consumption spending rose a tiny 0.1% last month, weakest gain in six months. That followed a 0.8% surge in January that reflected mild weather that lured shoppers to stores to spend holiday gift cards.
Personal incomes rose 0.3% in February, less than half January's 0.7% jump. The January increase had been boosted by federal government pay raises and cost-of-living adjustments for millions of Social Security recipients.
The scant 0.1% increase in consumer spending was just above market expectations for an unchanged reading and the weakest since August 2005. January's spending increase was revised down slightly to a 0.8% gain from the originally reported 0.9% surge.
The savings rate was negative for a fourth month, at minus 0.5%, meaning Americans spent all their income and more in February, either by borrowing or cashing in savings. The saving rate has not been positive since March 2005.
The report also showed a slowdown in inflation. The price index for consumer spending was flat in February after a 0.5% surge in January. When volatile food and energy costs are stripped out, the so-called core PCE price index rose 0.1%, in line with forecasts and down from a 0.2% increase in January.
Over the past 12 months, inflation eased to 2.9% from 3.1% in January. Core inflation, the price measure favored by the Federal Reserve, was steady at 1.8%.
Federal Reserve Chairman Ben Bernanke has argued that the Fed should adopt an explicit range for inflation and he has expressed a preference for a range of between 1% and 2% for a price measure that would exclude energy and food.
The Fed on Tuesday boosted its target for a key interest rate for the 15th consecutive time and signaled that more rate hikes were possible as the central bank seeks to slow economic growth enough to keep inflation under control.
Many economists believe the federal funds rate, the interest that banks charge each other, will be pushed to 5% at the Fed's next meeting in May. After that, many analysts believe the Fed will move to the sidelines and keep rates unchanged for the rest of the year.
From wire reports
WASHINGTON — Consumer spending, which had soared because of unusually warm weather in January, slowed sharply in February while Americans' incomes grew by the smallest amount in three months.
The Commerce Department said Friday that personal consumption spending rose a tiny 0.1% last month, weakest gain in six months. That followed a 0.8% surge in January that reflected mild weather that lured shoppers to stores to spend holiday gift cards.
Personal incomes rose 0.3% in February, less than half January's 0.7% jump. The January increase had been boosted by federal government pay raises and cost-of-living adjustments for millions of Social Security recipients.
The scant 0.1% increase in consumer spending was just above market expectations for an unchanged reading and the weakest since August 2005. January's spending increase was revised down slightly to a 0.8% gain from the originally reported 0.9% surge.
The savings rate was negative for a fourth month, at minus 0.5%, meaning Americans spent all their income and more in February, either by borrowing or cashing in savings. The saving rate has not been positive since March 2005.
The report also showed a slowdown in inflation. The price index for consumer spending was flat in February after a 0.5% surge in January. When volatile food and energy costs are stripped out, the so-called core PCE price index rose 0.1%, in line with forecasts and down from a 0.2% increase in January.
Over the past 12 months, inflation eased to 2.9% from 3.1% in January. Core inflation, the price measure favored by the Federal Reserve, was steady at 1.8%.
Federal Reserve Chairman Ben Bernanke has argued that the Fed should adopt an explicit range for inflation and he has expressed a preference for a range of between 1% and 2% for a price measure that would exclude energy and food.
The Fed on Tuesday boosted its target for a key interest rate for the 15th consecutive time and signaled that more rate hikes were possible as the central bank seeks to slow economic growth enough to keep inflation under control.
Many economists believe the federal funds rate, the interest that banks charge each other, will be pushed to 5% at the Fed's next meeting in May. After that, many analysts believe the Fed will move to the sidelines and keep rates unchanged for the rest of the year.