US Consumers Spending Rises in February

U.S. consumer spending rose in February, in the latest sign that the economy was regaining strength after being chilled by bad weather.

The Commerce Department said on Friday that consumer spending increased 0.3 percent last month after rising by a revised 0.2 percent in January. Spending was previously reported to have increased 0.4 percent in January.

Economists polled by Reuters had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, rising 0.3 percent in February.

The dollar rose to a session high against the yen after the data. U.S. stock index futures were little changed.

Spending in February was lifted by an increase in services consumption, likely because of increased demand for health care and utilities.

When adjusted for inflation, consumer spending rose 0.2 percent in February after gaining 0.1 percent in January.

This so-called real spending measure goes into the calculation of gross domestic product. Consumer spending rose at its fastest pace in three years in the fourth quarter, helping to lift economic growth to an annualized pace of 2.6 percent during the period.

A combination of bad weather, a slow pace of inventory accumulation by businesses, the expiration of long-term unemployment benefits and cuts to food stamps is expected to hold back growth to around a 2 percent rate in the first quarter.

But a rebound is expected as these factors fade.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza