February Income Rises, Spending Volume Falls

Personal income rose 0.3% in February, on track with the trend over the past year, but nervous consumers kept consumption spending unchanged while the volume of consumer purchases, after inflation, fell 0.4% due to soaring energy prices.

Freight volume likely fell in February because purchases of goods dropped 1.4% from January while the much larger services sector expanded slightly. The volatile durable goods sectors declined 1.9% -- not good news, but a frequent occurrence even in good times, according to Jim Haughey, senior economist for Newport Communications.
However, the steadier non-durable goods sector that generates most of dry van freight declined 1.1% after rising at an 0.8% month-to-month average over the past four months. Some of the decline was due to bad weather.
The Commerce Department report reflects the impact of war jitters already reported in employment, confidence and retail data for February, Haughey said. Early signs of March activity suggest that income is continuing to expand at the same pace and that the after-inflation volume of consumer spending is unchanged or possibly up slightly from February because of a much lower inflation rate in March.