Consumer spending rose in March, as Americans continued to shop despite uncertainty about the war in Iraq.
The Department of Commerce said Monday that personal spending climbed 0.4% last month to an annual rate of $7.526 trillion. Spending had risen 0.1% in the previous month. Personal income rose 0.4% in March, after rising 0.2% in February.
The reports were largely in line with economists' estimates of a 0.6% rise in spending and a 0.4% increase in income. Meanwhile, personal savings declined to 3.6% in March from 3.7% the prior month.
Economists expressed caution about the figures. "This data suggests we entered the second quarter with negative momentum. March spending is below the first-quarter
historical average," said Gerald D. Cohen, senior economist at Merrill Lynch, in his economic commentary following the report. "While spending looks like it picked up somewhat in April, it's too early to say how much of a postwar bounce we are getting."
Jeoffrey Hall, managing economist at Thomson Financial, noted: "The rise in income was in keeping with the weak trend of 2002. And that is tapering off because companies are not adding significantly to payroll. The energy component will unwind and should help on the consumer level, but it is surprising that consumers are still biding the time until business spending improves."
Meanwhile, Maury Harris, managing director and chief U.S. economist at PaineWebber, had mixed views on the data. "The figures were superficially lackluster, and real spending was still squeezed because of energy prices going up, but those numbers should start to improve soon. This was a prewar month, with businesses and people still cautious," he said.
The March report showed that spending on durable goods rose 1.6%, after a 1.5% decline in February. Incentives at automakers fueled spending as well. Economists also said that shoppers slowly returned to malls following cold weather in February, although purchases of nondurable goods fell 0.2% in March, following a 0.7% decline a month earlier.