Consumer spending and incomes rose in February

Americans earned a little more and spent a little more in February, thanks to a tax cut. But a big part of the extra money went to cover higher gas prices.

Consumer spending jumped 0.7 percent last month and personal incomes rose 0.3 percent, the Commerce Department said. Both gains reflected a Social Security tax cut, which boosted take-home pay.

Still, high gas prices soaked up much of the spending increase. Once inflation was removed, the rise was a more moderate 0.3 percent.

After-tax incomes were also hampered by inflation. Once accounting for higher prices, incomes actually fell 0.1 percent.

Economists are concerned that if energy costs keep going up, that will leave consumers with less disposable income and that would lead to slower economic growth. Consumer spending accounts for 70 percent of economic growth.

Read Full Article from The Associated Press

- Posted: 2011-03-28 10:33:43

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