| Consumer spending rose 0.2% in February.
Why it matters: This may seem small at first glance, but it is surprising considering that spending rose an astounding 2% in January.
- It would be natural to expect some pullback after such a large increase. But as they’ve done since Covid struck, consumers surprised us with their willingness and ability to keep spending.
Details: Inflation was 0.3% in February, so when adjusted for inflation spending was slightly negative. But the strength of spending after the big jump in January is still impressive.
- The rise in spending for the entire first quarter is likely to be large and a key driver of a strong quarter for overall economic growth.
Bottom line: How long consumers can continue to spend and push the long-awaited recession off even further is still the key question, as it has been for over a year. As long as they buck expectations and keep spending, consumers will be the catalyst for economic growth. |
