US consumer spending growth decelerates, hit by job fears
WASHINGTON (AFP) March 26- American consumer spending growth -- the most powerful engine in the economy -- decelerated abrubtly in February as job fears gnawed.
People boosted spending by a seasonally adjusted 0.2 percent, less than half the gain predicted by private economists, the Commerce Department (news - web sites) report showed Friday.
Consumer spending, which accounts for two-thirds of US economic activity, had advanced 0.5 percent in January.
"It is somewhat disappointing. It is much lower than anticipated," said Wells Fargo Banks chief economist Sung Won Sohn.
"Autos and other big-ticket items are no longer driving consumer spending. That is in part because employment really is going nowhere at the moment and consumer confidence is basically moving sideways."
People cut spending of big-ticket "durable" items by 0.2 percent while edging up expenditure on other goods 0.1 percent. Spending on services rose 0.4 percent.
American consumer sentiment brightened a little in March despite high fuel prices and the jobs drought, according to a barometer drawn up by the University of Michigan,
A consumer sentiment index, compiled from a survey, rose to 95.8 points in late March from 94.4 in February, the university said, defying private economists' forecasts of a slight deterioration.
The Commerce Department report showed people's incomes rose by 0.4 percent in February, boosted by a 0.5-percent boost in wages. Incomes had climbed 0.3 percent in January.
Disposable income -- income after tax and other payments -- also rose 0.4 percent, after a 0.9-percent jump in January.
A recent slide in mortgage rates should help pad people's wallets, allowing homeowners to re-finance their loans, pocketing extra cash and enjoying lower monthly payments, Sohn said.
"So far, we have had a sizeable tax refund and refinancing activity is picking up, so hopefully consumer spending will rebound somewhat in March and April," the economist said.
"But right now I think the biggest Achilles heel is lack of jobs."
The economy created just 21,000 jobs in February, less than one-fifth of the number predicted by analysts, as businesses battled to raise production without hiring new people.
The unemployment rate was stuck at 5.6 percent.
Official jobless data for March is out April 2.
"People are continuing to spend, though they are not breaking down the doors to the malls," said Naroff Economic Advisors president Joel Naroff.
"If we could only get some jobs created, those numbers would be even better, but we will have to live with them nonetheless."After taking inflation into account, expenditure was unchanged and disposable incomes edged up 0.2 percent.
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