- The Washington Times - Friday, March 26, 2004


Consumers, a key force shaping the economic recovery, were more restrained in February, increasing their spending by only 0.2 percent.

The over-the-month increase reported by the Commerce Department yesterday came after consumers boosted spending by 0.5 percent in January, according to revised figures. That was slightly stronger than the 0.4 percent first estimated a month ago.

“People are continuing to spend, though they are not breaking down the doors to the malls,” said Joel Naroff, president of Naroff Economic Advisors.

Even though the increase in spending in February fell short of the 0.5 percent rise that economists were forecasting, consumers have been keeping their wallets and pocketbooks sufficiently open to move along the economy’s recovery, analysts say.

And, they say that tax refunds arriving in mailboxes during the spring and extra cash coming from home-mortgage refinancings may give consumers an incentive to spend more, juicing up economic growth.

Americans’ incomes, meanwhile, rose by a solid 0.4 percent in February, following a 0.3 percent increase the month before. Income growth — an important factor in people’s ability to spend in the months ahead — was slightly better in February than the 0.3 percent increase that economists had been predicting.

The income and spending figures are not adjusted for price changes.

“Consumers took a bit of a respite in February but are likely to be more active spenders in the spring,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

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