WASHINGTON: US personal incomes grew at a solid pace in February, while consumer spending only rose marginally, the Commerce Department reported Monday.
Household income rose 0.4 percent for the second straight month in February, while growth in wages and salaries, the largest part of income, slowed.
Consumer spending edged up 0.1 percent after slipping in the prior two months. Adjusted for price changes, consumer spending fell 0.1 percent after a rise of 0.2 percent in January.
"Real spending has stuttered under the severe weather, but not as badly as last year," said Ian Shepherdson of Pantheon Macroeconomics. The analyst said the plunge in gasoline prices, leaving more cash in consumers' pockets, suggests "the scope for a spring rebound is now very large."
Inflation remained tepid in February , and well below the Federal Reserve's 2.0 percent annual rate target. The personal consumption expenditures price index, the Fed's preferred inflation measure, rose 0.2 percent after sliding 0.4 percent in January.
Stripping away often-volatile food and energy prices, "core" PCE prices inched up 0.1 percent for the second month running.
Compared with a year ago, PCE prices were up 0.3 percent and core PCE rose 1.4 percent.
Meanwhile, Americans were putting away more in savings. The personal saving rate increased by three-tenths point to 5.8 percent of disposable personal income.
"Spending growth will accelerate as more rapid economic growth lifts job and income growth and, likely, confidence. Risks to the outlook are close to balanced. A spike in interest rates as the first Federal Reserve tightening approaches could derail the recovery," said Scott Hoyt of Moody's Analytics.
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