WASHINGTON, Feb 29: US consumer spending showed a modest improvement in January according to a government survey on Friday, but economists said Americans’ wallets are being stretched by inflationary pressures.

A Commerce Department report showed that consumer spending increased 0.4 per cent last month while personal income rose 0.3 per cent.

Both readings were better than anticipated as most analysts had expected spending and income to rise 0.2pc respectively, but economists said consumers are also becoming more budget conscious about new purchases.

Analysts say it will be crucial for American consumers to maintain their legendary spending in order for the economy, which is being threatened by a deep housing slump, a banking credit crunch and slowing job growth, to avoid a recession.—AFP