Consumer spending trends up on rising employment, real estate values and stock markets, according to data released today by the Commerce Department.
Consumer spending trends reported by the Commerce Department today indicate that rising employment, home values and stock indices gave American consumers the confidence to open their wallets a little wider in February for the biggest increase in spending since September 2012.
Home values are back to levels last seen in the fall of 2003.
Disposable income – income after taxes - rose 1.1 percent in the second month of the year, a gain of 0.7 percent after factoring in inflation, according to the department’s Bureau of Economic Analysis or BEA, and spending rose 0.7 percent to $77.2 billion. That’s the biggest hike in consumption since spending rose 0.8 percent last September.
Confidence is also rising among Millionaires considering stocks and other investment products.
Savings rates – as a percentage of personal income – rose, as well, from 2.2 percent in January – the lowest rate since August 2007 - to 2.6 percent in February, but was down from the 6.5 percent rate reported for December of last year.
In January, disposable income fell by 4 percent – the largest monthly decrease since record keeping began in January 1959, according to the BEA, and a revised estimate of consumer spending trends shows that consumption rose by 0.4 percent. The January drop in disposable personal income is attributed to atypical factors, such as higher payroll taxes and accelerated bonuses and dividend payouts at the end of 2012.
Consumer confidence, as tracked by The Conference Board, rose in February, fueling consumer spending trends, but fell sharply in March, according to news reports.