Consumer Spending in U.S. Increases by Most in Three Months

Source: Bloomberg

By Victoria Stilwell Mar 28, 2014 12:29 PM ET

Consumer spending climbed in February by the most in three months as a pickup in incomes (PITLCHNG) encouraged Americans to return to stores after a harsh winter held the economy back.

Household purchases, which account for almost 70 percent of the economy, rose 0.3 percent after a 0.2 percent gain in January that was weaker than previously estimated, according to Commerce Department figures today in Washington. The increase matched the median forecast in a Bloomberg survey of economists. Incomes also advanced 0.3 percent.

The January revision to the spending data showed the economy suffered even more from the frigid weather at the start of the year than previously projected, prompting economists at JPMorgan Chase & Co. and RBS Securities Inc. to cut first-quarter growth forecasts. That underscores the need for bigger increases in employment to spur wage gains and purchases.

“The February numbers are fine, but there was a big revision moving January down,” said Guy Berger, a U.S. economist at RBS Securities in Stamford, Connecticut, who correctly forecast the gain in spending. “That additional boost in employment that we’re probably going to see in March, and maybe one or two of the other spring months, is probably going to boost income growth.”

Read more: http://www.bloomberg.com/news/2014-03-28/consumer-spending-in-u-s-increases-by-most-in-three-months.html