Household outlays increased at a steady pace as goods and services demand remained strong, even as personal income declined and inflation held firm.
By yourNEWS Media Newsroom
U.S. consumer spending advanced in February, reflecting continued demand for goods and services even as personal income declined and inflation remained elevated, according to new data released by the Commerce Department.
Personal consumption expenditures rose by $103.2 billion, or 0.5 percent, during the month, following a 0.3 percent increase in January. Spending on goods accounted for $58.7 billion of the gain, while services contributed $44.5 billion.
The increase was driven in part by higher spending on motor vehicles and parts, which rose $32.6 billion. Health care expenditures increased by $15.7 billion, while financial services and insurance climbed $10.4 billion. Transportation services also saw a $9.8 billion increase. Some categories, including food and beverages and recreational services, recorded declines.
On a year-over-year basis, consumer spending rose 5.34 percent, indicating sustained demand. The data suggests that households have continued to spend despite ongoing inflation pressures, supported in part by low unemployment levels and continued wage growth.
Market response to the report reflected optimism in consumer-driven sectors, with consumer discretionary stocks rising 1.02 percent, leading gains among the 11 sectors in the S&P index.
At the same time, personal income declined by $18.2 billion, or 0.1 percent, in February. Disposable personal income also decreased by 0.1 percent. The Bureau of Economic Analysis attributed the decline primarily to reductions in dividend income and government transfer payments.
Dividend income fell by $39.7 billion, while transfer receipts dropped $21.6 billion, including a $34.4 billion decrease in other government social benefits tied to Affordable Care Act enrollment estimates. Compensation increased during the month, driven by higher private-sector wages and salaries, and income from farm proprietors also rose.
Inflation remained steady. The personal consumption expenditures price index increased 0.4 percent from the previous month, with the core index, which excludes food and energy, also rising 0.4 percent. Compared with a year earlier, the headline PCE index rose 2.8 percent, while the core index increased 3.0 percent.
After adjusting for inflation, real consumer spending edged up 0.1 percent in February, suggesting modest growth in purchasing power. On a year-over-year basis, real spending rose 2.8 percent.
Personal outlays increased by $106.5 billion during the month, while personal savings declined to $931.5 billion. The personal saving rate fell to 4.0 percent, down from 4.5 percent in January.
The report indicates that consumer activity remained steady in February, supported by continued wage gains, even as income from dividends and government transfers declined and inflation persisted.
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