Consumer spending, personal income rise 0.6 percent in February

<br>WASHINGTON (AP) _ Consumers spent heavily in February as their incomes increased solidly _ more signs that the U.S. economy is gaining strength after a brief recession. <br><br>The Commerce Department

Friday, March 29th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ Consumers spent heavily in February as their incomes increased solidly _ more signs that the U.S. economy is gaining strength after a brief recession.

The Commerce Department reported Friday that spending by consumers, which accounts for two-thirds of all economic activity in the United States, increased 0.6 percent last month after jumping 0.5 percent in January.

At the same time, Americans' incomes, which include wages, interest and government benefits, also increased by 0.6 percent, the largest expansion since October 2000. Incomes rose 0.5 percent in January.

The data reinforce economists' view that the recession, which began last March, has ended and probably will turn out to be the country's mildest downturn ever.

Earlier this month, Federal Reserve Chairman Alan Greenspan offered his most optimistic assessment of the U.S. economy in more than a year, telling Congress that recovery was under way.

Some economists predict that economic growth, as measured by the gross domestic product, could hit a sizzling rate of 5 percent to 6 percent in the January-March quarter. Others forecast a rate in the 4 percent range. Growth should be helped along as the Federal Reserve's 11 interest rate cuts last year make their way through the economy.

The government reported Thursday that the economy grew by a faster-than expected 1.7 percent rate in the final three months of last year. Analysts were amazed by that turnaround because the economy, jolted by the Sept. 11 attacks, shrank at a 1.3 percent rate in the third quarter.

Consumers increased spending last month on big-ticket items, including cars, by 1.7 percent after cutting back a revised 0.8 percent in January.

For nondurable goods, such as food and clothing, consumers spent 0.3 percent more last month on top of a 1.1 percent rise in January. Spending on services increased 0.6 percent in February after a 0.4 percent jump the month before.

Disposable incomes _ income after taxes _ increased 0.7 percent in February after soaring 1.8 percent in January.

Because disposable incomes increased more quickly than spending in February, the nation's personal savings rate, which is savings as a percentage of after-tax income, was lifted to 2 percent from 1.9 percent in January.