In February, the number of dollars consumers spent rose only 0.2 percent, year on year, down from a revised 1.5-percent bump in January, the U.S. commerce department reported.
Inflation ran at 6 percent in February, meaning that consumers actually spent 0.1 percent less that month than in January, the department calculated.
The personal consumption expenditures price index (PCEP), the U.S. Federal Reserve’s primary measure of inflation, ran at an annual rate of 5 percent in February, compared to 5.3 percent the month before.
The “core” PCEP, which ignores energy and food costs, edged down to a 4.6-percent annual rate in February from 4.7 percent in January.
Recent surveys show increases in business activity and consumer confidence. Layoffs remain near historic lows, The Wall Street Journal reported.
February’s dollars spent on goods were 3.7 percent more than December’s, with notable increases in electronics, furniture, and, of all things, pleasure boats.
Spending on services expanded by 1.4 percent, emphasizing gains in air travel, visits to amusement parks, movie theaters, and restaurants.
Workers earned 0.3 percent more pay in February, particularly in service industries.
Equally important, February’s savings rate reached 4.6 percent, its greatest proportion in more than a year.
TRENDPOST: Because the figures are not adjusted for inflation, the data shows that Americans bought fewer goods and services in February.
The volume of goods and services purchased has been shrinking for several months, even though the number of dollars spent to purchase them has been rising with inflation.
Consumption spending makes up some 70 percent of the U.S. economy. As Americans buy smaller volumes of merchandise and experiences, the economy moves closer to recession. And to illustrate the extent of the “how low can you go,” American shopping experience, the uninviting crammed Dollar General discount chain has some 20,000 stores spread from sea to shining sea.