Your Economy (No Politics)

[Bullwinkle]

Income, spending gains slow
March 31, 2006: 8:38 AM EST


Report shows spending slightly better than forecasts, income slightly less than estimates; inflation reading tame.

WASHINGTON (Reuters) - U.S. consumer spending rose 0.1 percent in February, a sharp slowdown from January but slightly above expectations, while inflation eased, a government report showed Friday.

The Commerce Department said personal income grew 0.3 percent in February, just below Wall Street forecasts for a 0.4 percent rise, following a 0.7 percent gain in January.

The scant 0.1 percent 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 percent gain from the originally reported 0.9 percent surge.

The saving rate was negative for the fourth straight month, at minus 0.5 percent, meaning Americans spent all of 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 percent surge in January. When volatile food and energy costs are stripped out, the so-called core PCE price index rose 0.1 percent, in line with forecasts and down from a 0.2 percent increase in January.

Over the last 12 months, inflation eased to 2.9 percent from 3.1 percent in January. Core inflation, the price measure favored by the Federal Reserve, was steady at 1.8 percent.

http://money.cnn.com/2006/03/31/news/economy/incomespending.reut/index.htm?section=money_latest