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The Honolulu Advertiser
Posted on: Saturday, March 28, 2009

Consumer spending inches up in February

By Martin Crutsinger
Associated Press

Hawaii news photo - The Honolulu Advertiser

A customer yesterday tested out a digital camera at a Costco in Shoreline, Wash., a suburb of Seattle. Consumers increased spending in February despite a continued slide in income.

ELAINE THOMPSON | Associated Press

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WASHINGTON — After a half year of declines, consumer spending edged up for a second month in February even though incomes sagged under the weight of further job losses.

The spending increases were seen as a hopeful sign that this key sector of the economy is staging a modest rebound that could help pull the country out of the recession.

Consumer spending rose by 0.2 percent last month after an even bigger 1 percent jump in January, which was the largest one-month gain in 3 1/2 years, the Commerce Department reported yesterday. Those gains followed a record six straight monthly declines as consumers tightened their belts in the face of a deepening recession.

Americans' incomes slipped further in February, dropping by 0.2 percent, the fourth drop in the past five months, as wages and salaries continued to be battered by the massive layoffs that have occurred as the recession, already the longest in a quarter century, has deepened.

Consumer belt-tightening has caused the personal savings rate, which was hovering near zero a year ago, to jump sharply. It stood at 4.2 percent in February after being at 4.4 percent in January. That was the first time in more than a decade that the savings rate has been above 4 percent for two straight months.

A separate report yesterday showed that the Reuters-University of Michigan's survey of consumer confidence rose to 57.3 in March, still near a three-decade low but higher than the February reading of 56.3.

Economists said the slight rise in consumer confidence and the back-to-back increases in consumer spending after string of declines provided some reason to hope that at the very least, the steep slide in the economy could be coming to an end.