US consumer spending barely up in Feb

WASHINGTON (AP) — Americans barely increased their spending in February following a weak January performance, strong evidence that the severe winter will hold back the economy in the first quarter.

Consumer spending rose 0.3 percent in February following an even weaker 0.2 percent rise in January, the Commerce Department reported Friday. The January performance was cut in half from an initial estimate of 0.4 percent.

For February, spending on autos and other durable goods actually fell and much of the small gain reflected higher utility payments to pay heating costs.

Analysts said consumer spending, which accounts for 70 percent of economic activity, has slowed significantly in the January-March quarter and will hold back overall economic growth. But they are looking for a rebound in the spring as the weather improves.

Based on the weak February performance and the downward revision to January, economists at Barclays said they were trimming their forecast for overall economic growth in the first quarter to a two-percent rate, down from a previous estimate of 2.4 percent.

Analysts believe a second quarter rebound will be driven by pent-up demand for the purchase of items such as cars that were put off during the winter storms.

“We expect consumer spending to be significantly stronger in the second quarter,” said Chris G. Christopher, director of consumer economics at Global Insight. “Auto sales are expected to heat up in March and for the remainder of the year.”

The report showed that after-tax income was up 0.3 percent in February, the same as in January.