Incomes continued to rise for Americans in February, but they saved more of it than in any month in the past two years, according to Commerce Department data released late last week.
Personal disposable (after-tax) income jumped by 4.1% in February on a 12-month smoothed basis, on top of a similar gain in January, its fourteenth straight month of gains.
However, consumer spending, that important driver of economic growth, rose by only 3.9% compared to the same month last year, to an annualized $12.1 trillion, a smaller increase than January’s almost 4 percent rise, and the third straight month of deceleration.
Consumers didn’t spend much of their windfall, instead preferring to save it. The savings rate, or percent of disposable income socked away in savings and investment, rose to almost 5.8%, its highest level since late 2012.
Surges in spending on durable goods and services, which were 5.4% and 4.4%, respectively, were more than offset by sluggish nondurables spending, which rose by only 1.4%.
Within nondurables spending, apparel and footwear held their own in the month, rising by a collective 2.7% on a 12-month smoothed basis.
