BLBG: Consumer Spending in U.S. Rose Less Than Forecast in February
(Bloomberg) -- Consumer purchases rose less than projected in February, indicating the biggest part of the U.S. economy will find it hard to sustain momentum after the best quarter since 2006.
The 0.1 percent gain followed a 0.2 percent drop the prior month, Commerce Department figures showed Monday in Washington. The median forecast of 74 economists in a Bloomberg survey called for a 0.2 percent gain. Adjusted for inflation, spending declined for the first time in almost a year.
Frigid temperatures and snow in much of the Northeast and Midwest last month emptied malls and auto-dealer lots as Americans huddled at home to keep warm. While warmer weather may bring out shoppers, steady gains in payrolls have yet to foster bigger wage gains, which would help bolster spending.
“Consumers are maybe still a little cautious,” Kathleen Bostjancic, a financial-market economist at Oxford Economics in New York, said before the report. “Employment is looking firm, which is very supportive of spending. Faster wage growth would be the real silver bullet that’s been missing.”
Projections for spending ranged from little changed to a 0.5 percent gain. The previous month’s reading was initially reported as a decline of 0.2 percent.
Incomes climbed 0.4 percent in February for a second month, propelled by a jump in dividends. The Bloomberg survey median called for incomes to rise 0.3 percent. The prior month’s income figure was previously reported as a 0.3 percent gain.
Wages and salaries increased 0.3 percent after a 0.6 percent gain in January.
Saving More
The saving rate increased to 5.8 percent, the highest since December 2012, from 5.5 percent.
The economy expanded at a 2.2 percent annualized rate in the fourth quarter, led by the biggest gain in consumer spending in eight years, revised Commerce Department data showed Friday. The 4.4 percent jump in household purchases was the most since the first three months of 2006 and reflected bigger outlays on health care than previously estimated.
Americans, especially those living in the eastern U.S., felt the pinch from higher heating bills that came due this month. Some 23 states had a top-10 coldest February and nine had their second-coldest, according to the National Oceanic and Atmospheric Administration. Residents in Chicago and Cleveland observed record-low February temperatures.
The cold weather also slowed showroom traffic, hurting car purchases. Ford Motor Co.’s light-vehicle sales slipped last month, while results at General Motors Co., Fiat Chrysler Automobiles NV, Honda Motor Co. and Nissan Motor Co. rose less than analysts estimated.
Gasoline Prices
While gasoline prices advanced last month from a six-year low of $2.03 a gallon on Jan. 25, the nationwide average of $2.42 on Sunday was little changed from the end of February, according to figures from the motoring group AAA.
An improving job market continues to work in favor of consumers. February marked the 12th straight month that payrolls climbed by at least 200,000, and the jobless rate was the lowest in almost seven years, Labor Department data showed.
“The consumer is in decent shape,” Karen Hoguet, chief financial officer at department store chain Macy’s Inc., said during a March 24 conference presentation. At the same time, where customers are choosing to spend their money is “still going to be a challenge for retailers like us,” she said, citing electronics and cable services as alternate purchases.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Carlos Torres at ctorres2@bloomberg.net
