Posted on 03/28/2011 6:15:21 AM PDT by mlocher
WASHINGTON (Reuters) - U.S. consumer spending rose slightly more than expected in February for the eighth straight month of gains as households tapped their savings, government data showed on Monday, while inflation accelerated at its fastest pace since June 2009.
The Commerce Department said spending rose 0.7 percent after an upwardly revised 0.3 percent gain in January.
Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to advance 0.6 percent in February after a previously reported 0.2 percent rise.
Spending adjusted for inflation increased 0.3 percent last month after being flat the prior month. After increasing at its fastest clip in four years in the final three months of 2010, consumer spending is expected to slow in the first quarter, with rising energy and food prices stealing from spending on other goods and services.
Spending grew at a 4.0 percent annual rate in the fourth quarter, helping to lift overall economic growth to a 3.1 percent pace during the quarter from 2.6 percent in the July-September period.
High food and energy prices pushed up overall inflation last month. The Commerce Department said the personal consumption expenditures price (PCE) index rose 0.4 percent, the fastest since June 2009, after gaining 0.3 percent in January
The Federal Reserve's preferred measure of consumer inflation -- the core PCE index excluding food and energy -- increased 0.2 percent after rising by the same margin in January. In the 12 months through January, the core PCE index rose 0.9 percent, the fastest rise in four months, after rising 0.8 percent in January.
The Federal Reserve so far views the high food and energy prices as transitory, but Chairman Ben Bernanke said he would act to ensure an inflationary psychology does not take root.
Incomes rose 0.3 percent last month after rising 1.2 percent in January. That compared with economists' expectations for a 0.4 percent gain.
With consumption outpacing the growth in incomes, savings fell to $676.7 billion from $710.5 billion in January.
Too late. The recent Consumer Confidence Index and recent Rasmussen polls indicate consumers are very concerned about inflation.
Probably accounts for the rise in spending. People are stocking up on certain things now, rather than spend more later,
Of course Consumer spending is up.....everything cost more than it did a month ago. We’re spending more and getting less.
surprised that number is so low, considering the hikes in insurance premiums and energy expenses
Many not by choice.
Behavioral Economics is the order of the Day. Juice the E/S to new recovery highs and then watch the Wealth Effect influence spending. Rinse and Repeat.
America is an economy dominated by paper-hangers and manipulation. The “Tail wagging dog” involves focusing on the stock market first and corporate earnings and growth second. This travesty will have dire outcomes when production shortages arise because CEO’s no longer have to worry about selling products as long as their share prices are rising thanks to the Fed.
As the dollar devalues consumer prices increase, you must spend more fiat currency to bring home basic commodities. The decrease in the savings rate is just another symptom of the same problem.
Milk was $5.68 at Walmarket the other day...I did not buy any.
Sheesh...$5.68...I’ll never drink milk again.
You got it. Prices have risen more than .7 percent, so in reality, consumers are spending less.
Uh, wuz that .7% cash or on the Visa?
Wow...and I was gritching about paying $3.83 at Wallyworld yesterday.
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