Consumers Spent as Expected in February; Confidence Recovers in March
Consumers Spent as Expected in February; Confidence Recovers in March to 52.5
March 30, 2010 - During the month of February, U.S. consumers spent as expected despite a high unemployment rate and stagnant income levels. The Personal Consumer Expenditures (PCE) price index saw a 0.3% increase in personal spending; the core price index, which excludes food and energy, saw a 1.3% boost.
Economists closely watch consumer spending because of its large contribution to economic activity. Accounting for nearly 70% of demand in the economy, an increase in consumer spending is positive for stimulating recovery.
Furthermore, savings were down for the month; with income flattening, the saving rate in February was 3.1%, the smallest percentage seen since October 2008.
According to The Conference Board, consumer confidence recovered in March, surpassing most economists' forecasts. After stumbling to 46.4 in February, the boost to 52.5 is a welcoming surprise.
The present situation index rose to 26.0 from 21.7 in February, while the expectations index dipped down to 62.9.
Consumers continue to remain pessimistic about the current and prospective economic situation, with only 18.3% of consumers predicting better conditions six months from now.