(Bloomberg) — Consumer spending climbed in March, capping a lackluster first-quarter performance that was enough to keep the U.S. economy from shrinking.
Purchases rose 0.4 percent, the biggest increase since November, after a 0.2 percent February gain that was larger than previously estimated, Commerce Department figures showed Thursday in Washington. The median forecast of 79 economists in a Bloomberg survey called for a 0.5 percent increase. Incomes were little changed reflecting a drop in dividend payments.
"Consumer spending in the first quarter as a whole was OK," Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. "March was hopefully just a down payment on the rebound we're going to see in the second quarter."
Economists are counting on household spending to do the heavy lifting in reviving growth after slumps in business investment and exports caused the economy to stagger at the start of 2015. An improving job market and nascent acceleration in wage increases are among reasons such a rebound is probably in the works.
Projections for spending in the Bloomberg survey ranged from gains of 0.2 percent to 0.7 percent. The previous month's reading was initially reported as a 0.1 percent increase.
The Bloomberg survey median called for incomes to rise 0.2 percent. The unchanged reading last month followed a 0.4 percent gain in February that was driving by a jump in dividends.
Monthly Breakdown
The report represents the monthly breakdown of data published Wednesday that showed consumption climbed at a better- than-expected 1.9 percent in the first quarter. Still, that was less than half the pace of the prior three months, when spending climbed at the fastest rate since 2006.
The U.S. economy barely grew from January to March, with gross domestic product rising at a 0.2 percent annual rate and weighed by harsh winter weather and slumps in business investment and exports. GDP advanced 2.2 percent in the prior quarter, Commerce Department data show.
The Federal Reserve, which is considering raising interest rates for the first time since 2006, said the slowdown during the winter months in part reflects "transitory factors," according to a statement Wednesday following a two-day meeting. "Although growth in output and unemployment slowed during the first quarter, the committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace."
The Fed repeated it will raise rates when it sees further labor-market improvement and is "reasonably confident" inflation will move back to its 2 percent goal over time.
Little Inflation
Thursday's report showed the price index tied to consumer spending creased 0.2 percent in March, the same as in the prior month. From a year earlier, the gauge was up 0.3 percent. This inflation measure is preferred by Fed policy makers and last met their target in April 2012.
Stripping out the volatile food and energy components, the price measure climbed 0.1 percent from the month before and 1.3 percent in the 12 months ended March.
