Personal spending barely increased in February and the prior month’s advance was revised down as Americans saved more of their incomes.
Spending on goods and services climbed 0.1 percent for a third month in February, Commerce Department figures showed Monday. January outlays were revised from a previously reported 0.5 percent gain. Incomes rose 0.2 percent, pushing the saving rate to a one-year high.
The steady and slow advances in purchases over the past three months show consumers are being cautious about over-extending themselves. Robust labor conditions and savings from cheaper gasoline are nonetheless providing a solid foundation for households, whose spending is underpinning the economy.
“There’s still this sense of more of the same right now -- the consumer is still chugging along, not really strong but not terribly weak, either,” said Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida. “Things are a little bit softer than we’d hope to be, but still consistent with the economy growing.”
The Bloomberg survey median called for a 0.1 percent gain in February. Economists’ projections ranged from a 0.2 percent decline to a 0.3 percent advance.
After adjusting for inflation, in order to generate the figures used to calculate gross domestic product, purchases increased 0.2 percent last month after no change in January.
Steady gains in consumer purchases will be needed to keep growth churning. The economy expanded at a 1.4 percent pace in the fourth quarter, faster than the previously reported 1 percent, as stronger household spending helped cushion the expansion from weakness overseas, Commerce Department data showed Friday.
Household outlays on services increased 0.3 percent in February after adjusting for inflation.
The services category, which also includes tourism, legal help, health care, and personal care items such as haircuts, is typically difficult for the government to estimate accurately until more information is available in later months.
Spending on durable goods also rose 0.3 percent in February, while outlays for non-durable goods fell 0.3 percent.
Disposable income, or the money remaining after taxes, increased 0.3 percent in February for a third month after adjusting for inflation. The saving rate increased to 5.4 percent from 5.3 percent in January.
Wages fell 0.1 percent in February after a 0.6 percent advance the prior month.
The personal spending report showed the price index tied to consumer purchases fell 0.1 percent in February from the prior month. It rose 1 percent from the same time in 2015. This inflation gauge is preferred by Federal Reserve policy makers and hasn’t met their 2 percent goal since April 2012.
Stripping out the volatile food and energy categories, the price measure climbed 0.1 percent from January and rose 1.7 percent in the 12 months ended in February.
Federal Reserve Bank of St. Louis President James Bullard is among policy makers who are eyeing prospective gains in inflation as a reason to consider further increases in the benchmark interest rate.
“I think we are going to end up overshooting on inflation” and the natural rate of unemployment, Bullard said in a March 23 Bloomberg interview in New York. “You get another strong jobs report, it looks like labor markets are improving, you could probably make a case for moving in April.”