Spending, income rise in February
Americans increased their spending just 0.2 percent in February, while their incomes were boosted by increased wages and business owners’ income.
The Commerce Department said Thursday the modest spending increase followed an equal gain in January and a rise of 0.4 percent in December. Incomes increased a healthy 0.4 percent.
The report came as a new indication emerged of a healthy job market. The number of Americans filing claims for jobless benefits dropped by 12,000 last week to 215,000 – the lowest level in 45 years. It’s a sign that employers anticipate solid growth and want to hold onto their workers.
A closely watched signpost, consumer spending accounts for about 70 percent of U.S. economic activity.
After-tax income jumped 0.4 percent. With consumers holding back on spending, the savings rate rose to 3.4 percent – the highest since last August. The rate was 3.2 percent in January. Savings had fallen to a 12-year low in December.
The healthy income gains could spur more spending in the coming months.
The government on Wednesday revised upward to 2.9 percent its estimate of the rate of growth in gross domestic product for the fourth quarter. That capped a nine-month stretch in which the economy grew at the fastest pace in 12 years.