WASHINGTON — Consumer spending in the United States barely rose in February, and inflation retreated. The report from the Commerce Department on Monday also showed that consumer spending in January was not as strong as previously reported, signaling that economic growth remained sluggish in the first quarter.þþConsumer spending rose 0.1 percent as households cut back on goods purchases after a downwardly revised 0.1 percent gain in January. Consumer spending, which accounts for more than two-thirds of American economic activity, was previously reported to have increased 0.5 percent in January.þþWhen adjusted for inflation, consumer spending rose 0.2 percent. Given labor market strength and cheap gasoline, economists speculated that consumption had been hampered by a stock market sell-off at the start of the year that eroded consumer confidence.þþIn a separate report, the Commerce Department said the advance goods trade deficit widened to $62.9 billion in February, from $62.2 billion in January, rising for a fourth straight month as an increase in exports was offset by a gain in imports.þþInflation moderated last month. A price index for consumer spending dipped 0.1 percent, after nudging up 0.1 percent in January. In the 12 months through February, the personal consumption expenditures price index increased 1 percent; it rose 1.2 percent in January.þ þExcluding food and energy, prices gained 0.1 percent after advancing 0.3 percent in January. In the 12 months through February, the so-called core personal consumption expenditures price index increased 1.7 percent after a similar increase in January.þþþþþþ“While the data from January and February may overstate any underlying firming, we do think that the trend in core inflation is picking up,” said Daniel Silver, an economist at J.P. Morgan in New York.þþThat core index is the Federal Reserve’s preferred inflation measure and is running below its 2 percent target. The slowdown in the monthly reading came after the Fed chairwoman, Janet Yellen, recently expressed skepticism over the sustainability of the gains in core inflation measures.þþConsumer spending last month was held back by a 0.7 percent drop in purchases of goods. Spending on services rose 0.4 percent.þþPersonal income rose 0.2 percent after rising 0.5 percent in January. The slowdown in income growth is most likely temporary as anecdotal evidence indicates that a tightening jobs market is driving up wages.þþIn a third report, the National Association of Realtors said contracts to buy previously owned homes increased 3.5 percent in February to a seven-month high.þ
Source: NY Times
