Consumer spending grew 0.8 percent in February, the ""Labor Department"":http://www.dol.gov/ reported Friday, fueling expectations for a stronger first quarter economic surge than economists have forecast. Personal spending grew faster than the 0.6 percent market consensus.[IMAGE]
Personal income, BEA reported, grew just 0.2 percent in February, half the rate of growth expected by economists. In dollars, spending increased $86.0 billion in February while income ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô from all sources ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô grew $28.2 billion.
Spending for the first two months of the quarter averaged $10.9 billion, a new 15% increase over consumer spending in the first quarter. Consumer spending represents about 70.6 percent of that nation's GDP.
Personal savings as a percentage of disposable (after tax) income fell to 3.7 in February from 4.3 percent in January. Despite[COLUMN_BREAK]
continuing low interest rates, personal interest payments increased 2.0 percent in February to $161.1 billion, topping $160 billion for the first time since last September.
Per capita disposable income, which had fallen slightly in January, increased in February to an annualized rate of $37,606.
Wages and salaries rose 0.3 percent in February, BEA said, after increasing 0.4 percent in January. Manufacturing wages and salaries slowed in February while salaries in the service sector picked up. The increase in wage and salary income is inconsistent with the pick-up in jobs reported by the Bureau of Labor Statistics for February.
Wage and salary growth accounted for 71 percent of the growth income while ""transfer payments"" ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô various government programs including Social Security, Medicare, Medicaid and unemployment insurance ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô represented just under 11 percent of the total increase. Unemployment insurance payments dropped for the second straight month.
The increase in spending was evenly divided between goods and on services, but most of the increase in spending on goods came in the ""non-durable"" category, hinting at a lingering unwillingness by consumers to make purchase which require borrowing.
The Personal Consumption Expenditure (PCE) Price Index ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô often considered the Federal Reserve's favored measure of inflation -- increased 0.3 percent and is now 2.3 percent above its year ago level. Meanwhile, The Core PCE Index rose 0.1 percent and is up 1.9 percent in the last year. Core consumer inflation has been on a rising trend for the past 12 months.