Consumer spending, personal income rise 0.6 percent in February

WASHINGTON - Consumers spent heavily in February as their incomes increased solidly -- more signs that the U.S. economy is gaining strength after a brief recession. <br> <br> The Commerce Department reported Friday that spending by consumers, which accounts for two-thirds of all economic activity in the United States, increased 0.6 percent last month after jumping 0.5 percent in January. <br> <br> At the same time, Americans&#39; incomes, which include wages, interest and government benefits, also increased by 0.6 percent, the largest expansion since October 2000. Incomes rose 0.5 percent in January. <br> <br> The data reinforce economists&#39; view that the recession, which began last March, has ended and probably will turn out to be the country&#39;s mildest downturn ever. <br> <br> Earlier this month, Federal Reserve Chairman Alan Greenspan offered his most optimistic assessment of the U.S. economy in more than a year, telling Congress that recovery was under way. <br> <br> Some economists predict that economic growth, as measured by the gross domestic product, could hit a sizzling rate of 5 percent to 6 percent in the January-March quarter. Others forecast a rate in the 4 percent range. Growth should be helped along as the Federal Reserve&#39;s 11 interest rate cuts last year make their way through the economy. <br> <br> The government reported Thursday that the economy grew by a faster-than expected 1.7 percent rate in the final three months of last year. Analysts were amazed by that turnaround because the economy, jolted by the Sept. 11 attacks, shrank at a 1.3 percent rate in the third quarter. <br> <br> Consumers increased spending last month on big-ticket items, including cars, by 1.7 percent after cutting back a revised 0.8 percent in January. <br> <br> For nondurable goods, such as food and clothing, consumers spent 0.3 percent more last month on top of a 1.1 percent rise in January. Spending on services increased 0.6 percent in February after a 0.4 percent jump the month before. <br> <br> Disposable incomes -- income after taxes -- increased 0.7 percent in February after soaring 1.8 percent in January. <br> <br> Because disposable incomes increased more quickly than spending in February, the nation&#39;s personal savings rate, which is savings as a percentage of after-tax income, was lifted to 2 percent from 1.9 percent in January. <br> <br> <br>

http://accesswdun.com/article/2002/3/196735