WASHINGTON – Personal consumption expenditures (PCE) increased 0.6 percent to $55.5 billion, the U.S. Department of Commerce’s Bureau of Economic Analysis reported today, exceeding both analyst expectations and January’s 0.5-percent gain.
The PCE’s 0.6-percent rise was double the 0.3-percent forecast from a survey of 74 economists by Bloomberg News.
Real consumer spending, adjusted for price changes, edged up 0.2 percent, slightly less than in January, as a slowdown in spending on clothing, shoes, furniture and household goods was partially offset by increased spending on electricity and gasoline.
The PCE price index rose 0.4 percent to 115.9 points, doubling January’s 0.2-percent increase. The core index excluding food and energy – closely watched by the Fed – rose 0.3 percent to 113.6 points, exceeding January’s 0.2 percent increase, as physicians’ office prices rose.
Personal income from all sources increased 0.6 percent to $65.4 billion in February after rising 1.0 percent the month before. Wages and salaries edged up 0.4 percent after rising 1.2 percent in January, when the BEA said the total was boosted by bonus payments and the exercise of stock options.
Real personal disposable income – the after-tax income available for spending or saving, adjusted for price changes – edged up 0.1 percent in February after rising 0.6 percent in January.
“The Fed won’t be able to back off on rates because inflation is high and the consumer still looks to be alive and well,” Robert Gay, managing director at Fenwick Advisers LLC in Rye, N.Y., and a former Fed economist, told Bloomberg. “The Fed is still in a predicament.”
Personal savings last mount amounted to negative 1.2 percent of disposable personal income, the same as in January, as consumers continued to borrow or draw down assets to spend more than they made.
Additional information is available at www.bea.gov.
