US consumer spending held up in February before virus hit

[WASHINGTON] US consumer spending held up in February, the latest sign that the world's largest economy remained on stable footing before measures to contain the spreading pandemic began rippling through consumers and businesses.

Personal spending, which accounts for about two-thirds of the economy, rose 0.2 per cent for a second month, according to Commerce Department data released Friday that matched the median estimate in a Bloomberg survey of economists.

The last snapshot of relatively stable consumption will be followed by a March report showing just how steeply the US plunged into what's likely one of the steepest downturns ever. With job losses already in the millions and stores and offices closed to prevent greater transmission of the deadly pathogen, economists are projecting sharp declines in gross domestic product in the second quarter.

The report also showed personal income rose 0.6 per cent for a second straight month, reflecting increases in employee compensation and farm proprietors' income. After adjusting for inflation, spending was up 0.1 per cent for a third straight month.

Inflation data included with the report showed that the Federal Reserve's favored core price gauge climbed 0.2 per cent for a third straight month and an annual rise of 1.8 per cent that exceeded projections. The broader personal consumption expenditures price index, which the Fed officially targets for 2 per cent inflation, posted a 0.1 per cent monthly gain and also exceeded estimates with a 1.8 per cent annual rise.

BLOOMBERG

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