Consumer spending up just 0.1% in February

Consumers increased their spending at the weakest pace in six months February, while the 12-month rise in consumer prices was the largest in nearly five years.

Officials have sent signals that the pace of rate increases will accelerate this year after seven years of stagnant rates at a record low near zero.

The overall economy grew at a 2.1 percent rate in the October-December quarter, supported by a strong gain in consumer spending.

“Consumer spending is likely to pick up in March and the second quarter due to a sudden surge in tax refunds in the latter half of February, elevated levels of consumer mood, strong stock market performance, rising employment and disposable income and household wealth,” predicted Chris Christopher Jr., director of consumer economics at HIS Markit.

Many economists expect the economy will accelerate later this year to rates around 2.5 percent or more if President Trump is successful in winning approval for his economic stimulus package, which includes tax cuts, infrastructure spending increases and deregulation.

The combination of a strong gain in incomes and modest rise in spending pushed the saving rate up to 5.6 percent of after-tax income in February, the highest level since October and up from 5.4 percent in January.