Consumer spending dives 1% in February

WASHINGTON — Consumers spending and personal incomes both fell sharply in February as severe winter storms disrupted shopping in many parts of the country and the government wrapped up distribution of $600 relief payments.

However, both are expected rebound strongly this month as more people are vaccinated and flush with a second round of pandemic aid, this time in larger, $1,400 individual payments.

Consumer spending fell 1% last month, the Commerce Department reported Friday, the biggest drop since last April when spending tumbled 12.4% as the country was broadsided by the global pandemic.

Incomes fell a record 7.1% last month, a period when the government was completing the bulk of the $600 payments from December’s $900 billion relief bill.

Temperatures are rising with the arrival of spring, meaning consumers will be growing more active, and the Treasury Department reported this week that it had made 127 million payments totaling $325 billion in the first two weeks after President Joe Biden had signed the latest economic support package totaling $1.9 trillion.

“With $1,400 stimulus checks making their way into bank accounts, health conditions improving and weather warming up, U.S. consumers look ready for a spring bloom,” said Gregory Daco, chief U.S economist at Oxford Economics.

Consumer spending, which is closely watched because it accounts for 70% of economic activity, jumped 3.4% in January.