US personal spending rebounded less than forecast in February, while personal incomes outpaced expectations, a sign Americans were using their fuel savings to pay down debt and increase their personal savings.
Personal income including wages and salaries, interest, dividends, rent and transfer payments increased 0.4 percent in February, following an identical gain the previous month, the Commerce Department reported on Monday. Economists forecast personal incomes to rise 0.2 percent.
Private wages and salaries rose $21.9 billion in February following a gain of $44.2 billion in January.
The personal savings rate, which reflects personal saving as a percentage of disposable personal income, was 5.8 percent, up from 5.5 percent in January, official data showed.
Personal spending, which accounts for all the goods and services purchased by US households and nonprofit institutions, increased 0.1 percent in February after declining 0.2 percent the month before. Economists forecast personal spending to increase 0.2 percent.
Meanwhile, core personal consumption expenditure (PCE) – the Federal Reserve’s preferred guidepost of inflation – rose 0.1 percent. The core PCE price index was up 1.4 percent year-over-year, official data showed.
Monday’s report adds to existing evidence showing household consumption had cooled in February. Earlier this month the Commerce Department said retail sales declined unexpectedly in February, as colder weather weighed on the economy. US retail sales declined for a third consecutive month in February and at a rate of 0.6 percent. That was the first time since 2012 that retail sales had declined for three consecutive months.
Analysts use personal spending to gauge consumer confidence in the economy. Consumer confidence waned in March, although the general outlook remained positive. The Thomson Reuters/University of Michigan consumer sentiment index fell 2.4 points to 93.0 in March. Analysts forecast a bigger drop.
Better job prospects are expected to keep consumer confidence elevated in the spring, despite tepid wage growth. On Friday the Labor Department is expected to announce the creation of more than 240,000 nonfarm payrolls in March, marking the fourteenth consecutive month job growth was above 200,000.