The latest economic data is being tossed around by traders as relatively positive, but in truth, the past week has been hit and miss for the economy and the American people.
U.S. consumer spending matched Wall Street’s expectation for February, but gross domestic product missed the mark, according to two Commerce Department reports.
The Commerce Department said Friday that consumer spending increased 0.3 percent last month after 0.2 percent in January, though the government initially reported spending to have increased 0.4 percent in January.
Consumer spending accounts for more than two-thirds of U.S. economic activity, which was a disappointment on Thursday. The Commerce Department said the U.S. economy grew at an annual pace of 2.6 percent in the fourth quarter, up from a previous reading of 2.4 percent. However, the reading was slightly below the 2.7 percent rate Wall Street expected.
Spending in February was lifted by an increase in services consumption, likely driven by Americans paying for utilities in a harsh winter. And the cold weather has been blamed for other market troubles, particularly the housing market.
The National Association of Realtors reports signed contracts to buy previously-owned homes fell 0.8 percent in February, to the lowest level since October 2011. Wall Street was expecting the rate to remain unchanged. The gauge is off 10.5 percent from the same period in 2013.
The NAR has been scapegoating the winter for months, as the latest economic data on housing shows a slumping market, which no one is spending money on.
When adjusted for inflation, consumer spending rose 0.2 percent in February after gaining 0.1 percent in January.
The so-called real spending measure is used to calculate gross domestic product. Though economist polled by Reuters expected growth to be at a faster rate, US consumer spending rose at its fastest pace in three years in the fourth quarter, which is largely responsible for the annualized pace of 2.6 percent during the period.
Income rose 0.3 percent last month — and, rose by the same margin in January — but tt continues to be propped up artificially by government transfers for healthcare payments.
Disposable income for households — after adjusting for inflation — rose 0.3 percent. The saving rate, which is the percentage of disposable income households are socking away, rose to 4.3 percent last month from 4.2 percent in January.