U.S. Consumer Spending, Income Remain Sluggish

The latest figures show the slowest growth in income growth since July and in spending since September.

Consumer spending rose 0.3% in February from 0.4% the previous month while personal income was flat in February following an upwardly revised 0.3% growth in January, the Commerce Department said.

The latest figure showed the slowest growth in income growth since July and in spending since September. The economy has been growing since the second half of last year after plunging into recession in December 2007.

Wage income was flat in February, the Commerce Department said as consumers continued to struggle to obtain cash.

The saving rate in February slipped to 3.1%, its lowest reading since October 2008, as consumers spend at a faster clip than their incomes.

"The near-term outlook is still problematic," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com. "Wage income is rising only modestly. With unemployment near 10%, labor market power is clearly in employers' hands, so there is little prospect for much more acceleration in wage income," he said.

"We need some job growth and that could start with Friday's March employment report," said Joel Naroff, president of Naroff Economic Advisors. The monthly nonfarm payroll employment report later this week is expected to be positive even as unemployment remained a key impediment to economic recovery, analysts said.

Despite the expected job additions, analysts expect the unemployment rate to remain at 9.7% in March.

Copyright Agence France-Presse, 2010

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