WASHINGTON (MarketWatch) - U.S. consumer spending was flat in February after adjusting for inflation, the third consecutive month of weak consumer demand, the Commerce Department reported Friday.
Real consumer spending has risen less than 0.1% seasonally adjusted since November, a clear sign that the main engine of U.S. economic growth is stalling as job growth wanes and house prices tumble.
Inflation moderated in January, with consumer prices rising just 0.1% for the month. Core consumer prices - which exclude food and energy costs - also rose 0.1% as expected by economists.
In the past year, consumer prices are up 3.4%, while core prices are up 2%, within the Federal Reserve's target implicit zone.
Nominal incomes rose 0.5% in February, driven largely by the timing of some government transfer payments and large bonuses to some workers.
Economists surveyed by MarketWatch were looking for incomes to rise 0.2%. See Economic Calendar.
Income from wages and salaries increased 0.3%, entirely accounted for by large bonus payments made in the first quarter. Income from assets increased 0.2%, while proprietors' income fell 0.5%. Rental income sank 5.3%. Read the full report.
Real disposable incomes increased 0.3%, the biggest increase in after-tax, inflation-adjusted income since August.
With incomes rising faster than spending, the personal savings rate rose to 0.3%, the first time in four months that households have earned more than they spent. Most economists expect the savings rate to rise in coming months as consumers tighten their belts in anticipation of weaker income growth and tighter credit.
Real spending on durable goods increased for the first time since September, rising 0.2%. Spending on nondurable goods fell 0.1%, the third straight decline. Spending on services was unchanged.
Nominal spending rose 0.1%, ahead of the flat reading expected.