The Bureau of Economic Analysis said that personal and income rose 0.2 percent in February, the same as January. In real terms, using 2005 dollars, disposable personal income fell 0.1 percent in February, suggesting sluggish income growth. Meanwhile, personal consumption jumped by 0.8 percent, or double the 0.4 percent gain in January.
In real terms, personal spending grew 0.5 percent. As a result, the savings rate fell from 4.3 percent to 3.7 percent, its lowest level since August 2009.
Spending on manufactured goods rose 1.2 percent in February, building on strong gains in the prior two months, especially for durables. Durable goods purchases rose 1.6 percent, following 0.8 percent and 1.4 percent increases in December and January. Meanwhile, nondurable spending was up 0.9 percent, but adjusted for inflation, the gain was just 0.1 percent. Over the course of the past year, personal consumption has risen 4.1 percent.
Manufacturing wages increased from $728.9 billion in January to $730.4 billion, continuing an upward trend over the past couple years.
Overall inflation continues to be modest, but higher gasoline prices are having an impact. The implied inflation rate based on personal consumption expenditures is 2.3 percent over the past year, with energy costs 6.6 percent higher. Prices for nondurable goods increased 4.3 percent year-over-year, reflecting some easing from past months. Whereas, durable goods were 0.6 percent lower than they were this time last year.
Chad Moutray is chief economist, National Association of Manufacturers.
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