WASHINGTON — Consumers lifted spending in February at the fastest rate in five months — a positive sign for the economy — though a good chunk of their cash went to pay for higher gasoline prices.
Personal spending climbed a seasonally adjusted 0.7 percent last month, the Commerce Department said Friday. That was a notch higher than the estimate of economists polled by MarketWatch.
The increase in spending in January, what’s more, was revised up to 0.4 percent from 0.2 percent in another sign that consumers are still feeling pretty good.
The speedy pace of spending in the first two months of the year indicates that first-quarter growth could snap back sharply to the 3 percent range or more after a lackluster 0.4 percent increase in the final three months of 2012.
“Despite the expiry of the payroll tax cut and higher gasoline prices, we’re now likely to see the fastest quarterly gain in real consumption in two years,” said Paul Ashworth, chief U.S. economist at Capital Economics.
Yet the composition of spending also suggests some caution is in order. Virtually all of the increase in spending in February, for example, was devoted to perishable items such as gasoline and food.
Purchases of nondurable goods jumped 1.9 percent, likely reflecting the sharp spike in prices at the pump. The average national cost of a gallon of regular gas surged 13 percent in February, according to the Energy Information Administration.
Spending on durable goods was basically flat in February, marking the worst performance since last October. That’s a category that bears watching: Consumers usually cut back on the purchase of big-ticket items if they feel any economic stress or the need to rebuild their savings.
While the savings rate edged up to 2.6 percent from 2.2 percent in February, it’s still at a five-year low. A 2 percent increase in payroll taxes at the start of 2013 is one of the reasons Americans are saving less.
Yet spending was still fairly strong last month if perishables such as gasoline are excluded. What helped consumers in February was a 1.1 percent jump in personal income — the third strong gain in four months — after a 3.7 percent drop in January.
Inflation, meanwhile, remains low.
The PCE price index climbed 0.4 percent in February, largely because of higher gasoline prices, but it’s only up 1.3 percent over the past 12 months and below the Federal Reserve’s target of 2 percent.