Growth in spending by American consumers slowed in February and incomes fell more than forecast, reflecting the toll of a deteriorating job market. Purchases advanced 0.2 percent after climbing 1 percent in January, the Commerce Department said today in Washington. Much of the February gain was due to an increase in prices, leaving so-called real spending with a decline for the month. Taken together with the jump in spending in January, today’s report offers a picture of an economy that remains in recession, while the pace of the contraction has eased from the end of last year. Best Buy Co., the largest U.S. electronics retailer, yesterday reported that profit fell less than analysts forecast for the quarter ended Feb. 28. “We’re certainly not out of the woods by any means, but perhaps we’re seeing some signs of stabilization,” Jay Bryson, a global economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. Treasuries were little changed after the report, with yields on benchmark 10-year notes at 2.74 percent at 8:56 a.m. in New York. Futures on the Standard & Poor’s 500 Stock Index fell 0.9 percent to 819.60. Economists forecast spending would rise 0.2 percent, after an originally reported 0.6 percent gain the prior month, according to the median of 68 estimates in a Bloomberg News survey. Projections ranged from a decline of 0.5 percent to a 0.5 percent increase. Incomes Drop Incomes fell 0.2 percent, after a 0.2 percent increase in January. The survey median projected a 0.1 percent decrease. The figures make it that much more critical that the Obama administration’s initiatives to create jobs and Federal Reserve measures to revive credit take hold quickly to prevent the recession from deepening. Today’s report showed inflation accelerated. The price gauge tied to spending patterns rose 1 percent from February 2008, up from a 0.8 percent 12-month gain in January. The Fed’s preferred gauge of prices, which excludes food and fuel, climbed 1.8 percent, more than forecast. Adjusted for inflation, spending dropped 0.2 percent, following a 0.7 percent gain the prior month. Disposable income, or the money left over after taxes, decreased 0.1 percent, after rising 1.6 percent the previous month. Adjusted for inflation, disposable income dropped 0.4 percent. Durable Goods Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, dropped 1.5 percent last month after rising 3.2 percent in January. Purchases of non-durable goods and services were unchanged. Still, the inflation-adjusted spending so far this quarter is higher than the fourth-quarter average, setting the stage for a gain after plunging late last year. The economy shrank in the fourth quarter at a 6.3 percent annual pace, the worst performance since 1982, in what may be the depths of the recession. Consumer spending fell at a 4.3 percent rate, marking the first back-to-back declines in excess of 3 percent since records began in 1947. “We’re seeing a minimal amount of consumption, as people are just spending on bare necessities,” Lindsey Piegza, an economic analyst at FTN Financial in New York, said before the report. “You can’t have stable consumer spending until you have stable incomes or wealth accumulation.” Best Buy Co., the largest U.S. electronics retailer, yesterday reported profit that fell less than analysts forecast for the quarter ended Feb. 28. “We prepared for reduced consumer spending, and we were pleased when the quarter finished stronger than it began,” Chief Executive Officer Brad Anderson said in a statement. Carmakers General Motors Corp. and Chrysler LLC are still counting on government aid for survival. U.S. auto sales in February slid to the lowest rate since December 1981, led by a 53 percent plunge for Detroit-based GM.

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