March 29, 2008	Saturday	Rabi-ul-Awwal 20, 1429

WASHINGTON, March 28: US consumer spending stalled in February despite rising incomes as Americans boosted savings amid recession fears, according to government data released on Friday.

A Commerce Department report showed a meagre 0.1 rise in spending, the driver of growth in the world’s biggest economy. The figure was the weakest since September 2006 and matched analysts’ consensus forecast.

Incomes meanwhile rose 0.5pc, the report showed.

Adjusted for inflation, consumer spending was flat in February amid a severe housing slump, rising food and energy prices, tightening credit and a drop in household wealth as home prices decline.

“Real spending will still probably be up slightly for the first quarter as a whole, but momentum has stalled. The picture looks very bleak until May, when stimulus tax rebates start to arrive, which should give some albeit temporary relief,” said Nigel Gault, an analyst at Global Insight.

The 0.5pc rise in incomes beat expectations of a 0.3pc gain and was the strongest increase since July 2007. But analysts pointed out that the jump mostly reflected government accounting adjustments.

After adjusting for inflation and taxes, real disposable income also increased in February, rising 0.3pc after a 0.1pc gain in January.

The Commerce Department left unrevised its January gains of 0.4pc in spending and 0.3pc in income.

A closely watched inflation gauge, the personal consumption expenditures (PCE) price index, showed consumer prices rose 0.1pc in February. The headline increase included a 0.1pc drop in the prices of non-durable goods.

The core PCE reading, which excludes volatile food and energy costs, also increased 0.1pc, in line with expectations.

“When someone tells me that prices are barely budging I have to ask what planet they are referring to,” said Joel Naroff at Naroff Economic Advisors.—AFP