Consumer spending outpaced personal income growth in February, rising 0.8% from the previous month. Personal income rose by a more modest 0.2%. This led the savings rate to fall sharply to 3.7% from 4.3% in January.
Nominal personal consumption rose 0.8% in February, its fastest rate since July. The spending was driven primarily by durable goods purchases, particularly autos. Real consumer spending rose 0.5% over the month, outpacing the cumulative growth for the last four months.
Real personal income shrank by 0.1% in February, despite 0.2% nominal growth. Real personal income, excluding transfer payments, grew for the first time in six months.
Consumer prices rose at their fastest rate since August, however much of this was driven by energy as core prices only rose 0.1%.
The savings rate fell sharply in February as a result of consumer spending growth outpacing income. The savings rate fell to 3.7% from a downwardly revised 4.3%. This is the first time the consumer savings rate has been below 4% since August 2009.
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