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U.S. spending, income up
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April 30, 2001: 10:46 a.m. ET
March gains meet or exceed those in February as economy holds ground
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NEW YORK (CNNfn) - U.S. consumer spending and personal incomes rose in the United States last month, the government said Monday, indicating the world's largest economy may be sluggish but is holding its ground.
Spending jumped 0.3 percent after rising a revised 0.2 percent in February, while personal income grew 0.5 percent after rising a revised 0.5 percent in February, the Commerce Department said. The savings rate hit a negative 0.8 percent, slightly better than February's revised rate of negative 1.0.
Economists expected spending to rise 0.2 percent and income to rise 0.5 percent, according to a survey by Briefing.com.
Economists keep a close watch on consumer spending, as it accounts for two-thirds of the U.S. economy. The March data come on the heels of recent mixed reports on the health of the economy that show consumer confidence has dropped while the gross domestic product has grown.
"Given the huge decline in consumer confidence, this (gain in spending) does not seem unreasonably weak, especially with consumers' real after-tax income growth slowing too," said Ian Shepherdson, an economist with High Frequency Economics.
Analysts and investors say consumer spending is likely to continue to support the slowing U.S. economy, while the Federal Reserve has helped out by cutting interest rates four times in the past year.
On Wall Street, investors liked the report and drove stocks higher in morning trading.
Financial Oxygen economist Steven Wood said he expects consumer spending to slow "moderately" in the second quarter of 2001, but he was encouraged by the March data.
"Despite the loosening of the labor markets, income gains remain sufficient to support spending at a moderate pace," Wood said.
Consumers were able to spend a bit more because they were taking home a bit more for the fifth straight month. Personal income rose to $8.59 trillion from a revised $8.55 trillion in March, the department said.
But after-tax spending rose to $7.02 trillion from a revised $7.0 trillion in February. Spending, combined with interest and transfer payments, was $58.5 billion more than after-tax income, leading to a negative savings rate of 0.8 percent. The savings rate means that for every $100 consumers took home in after-tax income they spent $100.80. 
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