Consumer spending up 0.8% in February
The floor of a Macy's in New York City. Consumer spending rose unexpectedly in February, adding more fuel to the recovery fire.
Jeremy Hobson: Consumer spending was the big surprise of the morning. The government said Americans spent 0.8 percent more in February.
And that is where we will start with Chris Low, chief economist with FTN Financial, he’s with us live from New York. Good morning, Chris.
Chris Low: Good morning.
Hobson: So kinda surprising for some people, why this big rise in consumer spending?
Low: Yeah, it was quite surprising. It was across the board. We had an increase of 1.5 percent in durable goods spending -- with car sales leading the way there, non-durables was up and so was service spending.
Hobson: And what’s going on there Chris because you’d think, that with these rising gas prices, consumers would be cutting back on their spending a little bit.
Low: Well that’s exactly right and part of this is a consumption of gasoline and that’s offset by the price rise so you have to sort of dial it back by 0.3 percent to adjust for that but still, with spending on cars and restaurants and so on, I think part of it is the warmest weather in about 50 years which also had an impact on the numbers.
Hobson: That’s sending more people out to do a little more spending that they would have held off otherwise on?
Low: That’s right, you know, if there’s a snowstorm and three feet of snow in Boston for example, that can sort of wreck car sales nationally for the month and as a result I think, some of this strength is probably going to come out of the spending that would have taken place in March and April otherwise. Still, the numbers -- a lot better than expected.
Hobson: Chris Low, chief economist with FTN Financial. Thanks as always.
Low: Thank you.