U.S. consumer spending fell slightly in January as gasoline prices remained low, according to a new Commerce Department report released Monday.
The 0.2% decline from the month before follows a 0.3% drop in December from November, which was unchanged from the previous reading.
The same report showed personal incomes increased 0.3% in January, following a 0.3% rise in December from November.
Both January readings were slightly less than many analysts were expecting.
The report follows one released Friday showing the U.S. economy grew in the final quarter of 2014 less than originally estimated.
The latest reading of the gross domestic product, which is a measure of the nation’s total output of goods and services, shows GDP increased at a 2.2% annual rate, down from 2.6% estimate initially reported by the Commerce Department a month earlier. A third estimate is expected to be released in about a month.
It is also sharply lower than the 5% annual pace during the third quarter of 2014.
The most recent figure was lower due to businesses adding less inventories than first estimated, while U.S. imports crept higher -- but consumer spending was the best in the quarter since 2006.
The decline in fourth quarter GDP from a month earlier was not unexpected, with the performance at least eradicating fears that end of the year growth slipped below 2%, according to Sterne Agee Chief Economist Lindsey Piegza.
“A weaker growth report at year-end further undermines expectations for future growth as we look out to 2015 and beyond,” she said. “Furthermore, the underlying trends reported in the preliminary report remain; while consumers were out spending at the end of the year thanks to lower gas prices, businesses continue to struggle amid uneven demand and a rising U.S. dollar undermining export growth.”
Completing the year with an average 2.4% growth rate in 2014, Piegza said the economy continues to bounce along in the 2% to 2.5% growth range established at the end of the Great Recession. She said while this is positive, growth remains modest, implying a similar, “more of the same” growth trend and a continued need for further accommodation from the Federal Reserve, which has been considering hiking interest rates from a near-zero level.
Meantime, a separate report shows the final reading of the University of Michigan Survey of Consumers in February is better compared to a year ago. It registered a slight decline from the month before, while still remaining at its best level since before the Great Recession.
Its Index of Consumer Sentiment was 81.6 in February, down 2.8% from January, but up 16.9% from the same time a year earlier.
Slight month-to-month drops were also seen in measures of consumer feeling about current economic conditions and expectations for the future, but these measures were up compared to February a year ago.
“Consumer optimism was affected by lower gas prices and an unusually harsh winter. The small overall decline from January still left consumer confidence at the highest levels in eight years,” said Surveys of Consumers chief economist, Richard Curtin.
“It is hard not to attribute the small February decline to the temporary impact of the harsh weather, as declines that occurred in the Northeast and Midwest were triple the average loss, while Southern residents grew more optimistic,” he said. “Low gas prices had a larger impact on lower income households, narrowing the difference between low and high income households. The data indicate that total real personal consumption expenditures will grow at 3.3% during 2015."