New figures show biggest driver of the U.S. economy increased last month while the overall economy grew more than estimated a month ago.
Consumer spending in rose 0.3% in February, according to a report released late last week by the U.S. Commerce Department. The increase is the biggest in three months and follows a 0.2% gain in January, but less than the 0.4% hike previously estimated.
Personal income during February rose by 0.3% Compared to a year ago personal consumption is up 3% while income has gained 3.1%. This follows a separate report from the Commerce Department showing the U.S. economy grew at a 2.6% annual rate in the final quarter of last year, compared to a 2.4% estimate a month ago and a 4.1% rate in the third quarter of 2013.
The new reading of the gross domestic product, which is a measure of the total output of goods and services, show for all of last year it expanded at a 1.9% rate, compared to 2.8% in 2012.
Much of the advance in the fourth quarter was due to increased consumer spending, gaining 3.3%, the best showing since the final quarter of 2010, and better than the earlier reported 2.6% increase.
Goods consumption was revised down from a 3.2% to 2.9% hike, but service spending was revised up from 2.2% to 3.5% gain, accounting for nearly all of the additional headline growth reported in the third revision of the fourth quarter.
“Consumption remains at a stagnant 2% pace. Still, consumers are spending despite uneven income growth,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “The most recent upward revision to fourth quarter 2013 growth was thanks to a hefty upward revision to spending from 2.6% to 3.3%, the fastest pace since the fourth quarter of 2010.”
She says going forward, however, in order for consumers to maintain even this lackluster 2% pace, “we need to see organic job and income creation.”
“While a slowdown from the third quarter, the U.S. economy grew at a faster pace than previously reported at the end of 2013 as consumer spending rose by the most in three years. The spending rise itself reflecting a hearty increase in service spending, particularly in health care services,” Piegza said.
She notes business investment, however, was revised down significantly suggesting businesses remain hesitant to invest amid an uncertain outlook for the U.S. recovery.
Other economic indictors of importance to trucking that came out recently and are worth noting include:
New home sales in the U.S. fell 3.3% in February, hitting its lowest level in five months. The drop is being attributed to cold weather during the month and increasing mortgage interest rates.
New orders for durable goods increased 2.2% in February, following two consecutive monthly declines. The gain was lead by a 6.9% hike in new transportation orders. New nondefense orders in February fell 2.8%.
Shipments of durable goods during the same time increased 0.9%, following two straight monthly drops. It was also led by a gain in transportation equipment shipments, adding 1.3%, with nondefense shipments adding 0.1%.
Existing-home sales declined 0.4% to a seasonally adjusted annual rate of 4.60 million in February and 7.1% below the 4.95 million-unit level in February 2013. February’s pace of sales was the lowest since July 2012, when it stood at 4.59 million.