January's bump in spending, incomes fades as quarter ends Consumer spending and incomes took a step back in March after two steps forward in January, a sign that the improvement in the consumer sector in the first quarter was fragile and tentative. Real consumer spending fell 0.2% in March after gaining 0.9% in January and 0.1% in February, the Commerce Department reported Thursday. Consumer spending rose 2.2% on an annual basis in the first quarter, the government reported Wednesday. But almost all the increase came in January, which leaves the first quarter ending on a very weak note. Meanwhile, nominal incomes fell 0.3% in March as wages and salaries slid 0.5%. Americans pocketed the modest tax break they got in March as part of the economic stimulus package, boosting their savings rate to 4.2% of after-tax income in March from 4% in February. A year ago, the savings rate was 0.2%. With inflation quiet in March, real after-tax incomes were flat. Real disposable incomes had jumped 1.4% in January before falling 0.3% in February. Inflation was tame in March, the government report said. The personal consumption expenditure index was unchanged in March. Core prices - which exclude food and energy goods and services - rose 0.2% for the third straight month. Consumer prices are up 0.6% in the past year, while core prices have risen 1.8%. More details Real spending on durable goods fell 0.8%. Real spending on nondurable goods fell 0.6%, and rose 0.1% for services. Incomes declined from every source except transfer payments -- such as Social Security, pensions, and unemployment benefits -- which increased 0.9%. Nominal incomes from compensation fell 0.3%. Small-business income fell 0.6%, while income from assets fell 1.1%. Rental income fell 3.6%. Taxes paid fell 2.5%, the seventh consecutive decline.

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