Consumers spent more in March even as their income rose
less than analysts had projected, a mixed economic message to start a week that
will end with the latest government unemployment report.
Consumer spending was up 0.2% last month, down from February's 0.7% rise, the
Commerce Department said Monday.
But spending still was up, an unexpected improvement. The median estimate of
economists surveyed by Bloomberg News was that spending would be flat.
The March increase in spending came despite personal income's rising just 0.2%.,
less than the 0.4% estimated by economists.
Consumers increased their spending without raiding their savings. The savings
rate was 2.7% in March, the same as the previous month.
The new data provide a mixed picture before Friday's report on April employment.
The larger-than-expected rise in spending is good news, but the
lower-than-expected rise in personal income is not.
Amid fears of another spring slowdown, economists expect the government to
report the economy added 150,000 net new jobs this month.
Such a figure would indicate a moderately growing labor market and would be a
major improvement over the disappointing 88,000 net new jobs added in March.
Personal income had shot up 1.1% in February, helping offset a steep 3.6%
decline in January.
Fears of the automatic tax increases that were part of the so-called fiscal
cliff were a major factor in the volatility of those figures. Many companies
paid bonuses and dividends in December to avoid tax increases, such as the rise
in capital gains rate, that kicked in at the start of the year.
Those early payments reduced personal income in January.
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