WASHINGTON (Reuters) – U.S. consumer spending fell the most in 10 months in February when a cold snare seized many parts of the country and lifted them from the second round of stimulus surveys to income-earning households. into middle and lower, although the recession slipped. temporarily liable.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 1.0% last month after rebounding 3.4% in January, the Commerce Department said Friday. That was the biggest drop since April 2020, when the economy was reeling from the closure of incompetent industries like restaurants to reducing the spread of COVID-19 infections.
Personal income fell 7.1% after rising 10.1% in January. Economists surveyed by Reuters had forecast that consumer spending would fall 0.7% in February and revenues would decline 7.3%.
Extreme weather conditions in the second half of February, including severe winter storms in Texas and other parts of the densely populated region of the South, gloomy home construction, factory production, orders and shipments of manufactured goods on the last month.
But activity is expected to rebound in March amid warmer weather, a White House $ 1.9 trillion pandemic rescue package and more vaccines against the crown virus.
The major relief package agreed this month sends an additional $ 1,400 checks to certified households and extends the government’s safety net for the unemployed through Sept. 6. The government reported Thursday that a collapse claims for unemployment benefits to a low level last year. week.
U.S. stocks opened higher. The dollar rose against a basket of other currencies. U.S. Treasury prices were lower.
BROAD CONFIRMATION
Last month saw a decline in consumer spending, with a sharp drop in the purchase of pharmaceuticals and leisure products. Consumption of goods fell 3.0% after rising 8.4% in January.
The cost of services rose 0.1% after rising 0.9% in January. Consumers spent more on facilities and health care in hospitals, but cut back on dinner.
With soft demand, inflation returned last month. But accelerating prices are expected to begin in March due to a wider reopening of the economy and the fall of last year’s weak readings from the calculation, as well as a very appropriate fiscal and monetary policy.
Federal Reserve Chairman Jerome Powell told lawyers this week that the expected inflation rise over the year will be “particularly large or sustained. ”
Personal consumption expenditure (PCE) index excluding the food and volatile energy component gained 0.1% after rising 0.2% in January. In the 12 months through February, the basic PCE price index climbed 1.4% after rising 1.5% in January. The main PCE price index is Fed’s preferred inflation measure for its 2% target, flexible average.
When adjusted for inflation, consumer spending fell 1.2% on last month after jumping 3.0% in January. The decline in real consumer spending did nothing to dampen enthusiasm for economic growth in the first quarter, with a sharp reversal expected in the coming months.
The economy is expected to grow at a rate of 7.5% this quarter after expanding at a rate of 4.3% in the fourth quarter. Growth this year could exceed 7%, the fastest rate since 1984. The economy contracted by 3.5% in 2020, the worst performance in 74 years.
Last month’s revenue was downgraded by a decline in government movements. Wages were also flat. The rate of savings to a record high fell 13.6% from 19.8% in January.
Reciting with Lucia Mutikani; Edited by Chizu Nomiyama and Paul Simao