US consumers spent more in March than in February, but much of the gain was due to higher-priced food, energy and services, government data showed on Thursday.
US consumer spending rose 0.4 percent in March from the prior month, while household income climbed 0.3 percent, the Commerce Department said.
The March spending increase was the strongest since January and double analysts' consensus forecast of a 0.2 percent gain. The income increase was slightly below market expectations of 0.4 percent.
Consumer spending, the driver of growth in the world's biggest economy, sharply accelerated from February's meagre 0.1 percent gain. Household income in February had climbed 0.5 percent from January.
However, after adjusting for higher prices, real consumer spending was up 0.1 percent compared with no change in the preceding month.
And adjusted for inflation and taxes, real disposable income fell slightly - less than one tenth of a percentage point - which the Commerce Department reports as zero change, after a 0.3 percent increase in February real incomes.
"Consumer spending is moving sideways - but at least it hasn't yet shown the sharp declines one might have expected given the recessionary readings for consumer sentiment," said Nigel Gault, analyst at Global Insight.
Consumer confidence is declining in the face of ever-climbing food and energy prices, a slowing labour market, tightening credit and eroding household wealth as house prices drop.
On Wednesday the Commerce Department reported the economy grew at a 0.6 percent annual pace in the January-March period, matching the pace of the fourth quarter of 2007.
The first estimate of gross domestic product was slightly better than expected and came amid fears that the world's biggest economy is headed for recession, generally defined as two consecutive quarters of declining activity.
An inflation gauge in Thursday's consumer spending report, the personal consumption expenditures (PCE) index, showed consumer prices rose 0.3 percent in March, after 0.1 percent in February.
The core PCE reading, which excludes volatile food and energy costs, rose 0.2 percent March, after 0.1 percent in the prior month, exceeding expectations of a 0.1 percent rise.
The headline and core PCE increases were the largest since January.
On a 12-month basis, inflation was up 3.2 percent in March, after 3.4 percent, while core inflation edged up to 2.1 percent, from 2.0 percent.
Spending on non-durables such as gasoline was up 0.4 percent while services rose 0.6 percent.
Purchases of durable goods, big-ticket items like refrigerators and televisions, on the other hand, fell 0.4 percent.
After inflation adjustments, spending on non-durables and services rose 0.2 percent and spending on durable goods fell 0.5 percent.
The personal savings rate fell back to 0.2 percent from 0.4 percent in February.
US consumer spending rose 0.4 percent in March from the prior month, while household income climbed 0.3 percent, the Commerce Department said.
The March spending increase was the strongest since January and double analysts' consensus forecast of a 0.2 percent gain. The income increase was slightly below market expectations of 0.4 percent.
Consumer spending, the driver of growth in the world's biggest economy, sharply accelerated from February's meagre 0.1 percent gain. Household income in February had climbed 0.5 percent from January.
However, after adjusting for higher prices, real consumer spending was up 0.1 percent compared with no change in the preceding month.
And adjusted for inflation and taxes, real disposable income fell slightly - less than one tenth of a percentage point - which the Commerce Department reports as zero change, after a 0.3 percent increase in February real incomes.
"Consumer spending is moving sideways - but at least it hasn't yet shown the sharp declines one might have expected given the recessionary readings for consumer sentiment," said Nigel Gault, analyst at Global Insight.
Consumer confidence is declining in the face of ever-climbing food and energy prices, a slowing labour market, tightening credit and eroding household wealth as house prices drop.
On Wednesday the Commerce Department reported the economy grew at a 0.6 percent annual pace in the January-March period, matching the pace of the fourth quarter of 2007.
The first estimate of gross domestic product was slightly better than expected and came amid fears that the world's biggest economy is headed for recession, generally defined as two consecutive quarters of declining activity.
An inflation gauge in Thursday's consumer spending report, the personal consumption expenditures (PCE) index, showed consumer prices rose 0.3 percent in March, after 0.1 percent in February.
The core PCE reading, which excludes volatile food and energy costs, rose 0.2 percent March, after 0.1 percent in the prior month, exceeding expectations of a 0.1 percent rise.
The headline and core PCE increases were the largest since January.
On a 12-month basis, inflation was up 3.2 percent in March, after 3.4 percent, while core inflation edged up to 2.1 percent, from 2.0 percent.
Spending on non-durables such as gasoline was up 0.4 percent while services rose 0.6 percent.
Purchases of durable goods, big-ticket items like refrigerators and televisions, on the other hand, fell 0.4 percent.
After inflation adjustments, spending on non-durables and services rose 0.2 percent and spending on durable goods fell 0.5 percent.
The personal savings rate fell back to 0.2 percent from 0.4 percent in February.
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