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Five months of higher spending, six months of flat income

Personal spending rose 0.3 percent in February, the Commerce Department reported Monday. But US stimulus programs have not managed to boost household incomes.

Yenif Polanco checks a price tag while shopping at Century 21 department store in New York March 3. Personal spending rose 0.3 percent in February, according to the US Commerce Department.

Mark Lennihan/AP Photo/File

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American consumers are alive and shopping.

Personal spending rose 0.3 percent in February, the fifth straight month of rising consumption and a signal of recovery for the US economy.

The news, reported by the Commerce Department Monday, came with some mixed signals. Inflation-adjusted incomes have been relatively stagnant for six months, despite the buoying effect of government stimulus programs designed to bolster slump-affected families.

Yet the gains in spending indicate some resilience as the economy struggles to get on course for sustainable growth.

"Overall, real consumer spending is on track to rise just above 3 percent [annualized] in the first quarter, which would be the strongest increase in three years and much better than the fourth quarter's 1.6 percent," economist Nigel Gault of IHS Global Insight says in a written analysis of the numbers. Spending "is being helped by a stabilizing labor market and, temporarily, by around $20 billion in refundable 'Making Work Pay' tax credits being paid out as workers file their 2009 tax returns."

Mr. Gault says personal income held flat in February, partly because bad weather in many parts of the US reduced the hours people worked. But he predicts a rise in March, as both employment and the length of the work week rise.


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