Consumer spending rises 0.3% in March

WASHINGTON – The nation’s personal savings rate fell to 0.2 percent last month, from 0.4 percent in February, as consumer spending outpaced disposable personal income, the U.S. Commerce Department’s Bureau of Economic Analysis said today. But the March level still matched the average personal savings rate over the past year.

Consumer spending nationwide rose an inflation-adjusted 0.1 percent in March, led by higher spending on services, after holding steady in February. Over the past year, real personal consumption expenditures – PCE adjusted for inflation – have risen at an average monthly rate of 0.3 percent.

Prices, as measured by the PCE price index, rose 0.3 percent last month, matching their average rate over the past year, after rising 0.1 percent in February. The March index was boosted by higher prices for food and energy. (READ MORE)

Meanwhile, the BEA said, personal income rose 0.3 percent last month, slowing from February’s 0.5-percent gain but matching the growth rate over the past year. Wages and salaries – the largest component of personal income – grew 0.5 percent, accelerating from February’s 0.3 percent.

Real disposable personal income was virtually unchanged, however, falling less than 0.1 percent in March after rising 0.3 percent in February. Real DPI has risen at an average rate of 0.1 percent over the past year, the BEA noted.

“Inflation continues to take a pretty big bite out of consumers’ spending power,” Christopher Low, chief economist at FTN Financial in New York, told Bloomberg News. “Consumers are likely to continue to spend at a very slow pace.” Added Ryan Sweet, an economist at Moody’s Economy.com in West Chester, Pa.: “Their finances are being squeezed on two fronts: they’re getting pressure from higher energy prices, and slower income and job growth.”

Additional information, including the full Personal Income and Outlays report for March, is available from the U.S. Commerce Department’s Bureau of Economic Analysis at www.bea.gov.