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Consumer spending in U.S. increases for fifth month

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Economists predict that the rebound could accelerate when employment strengthens.

BusinessWeek | April 1, 2010

Consumer spending in the U.S. rose in February for a fifth consecutive month, a rebound that may accelerate when employment strengthens.

 
Growing demand means retailers such as Best Buy Co. may be able to sustain gains in profits even as Americans face rising foreclosures and a jobless rate that economists anticipate will be slow to retreat from the 26-year high reached last year. Household spending, which accounts for about 70 percent of the economy, may contribute more to the expansion in coming months.
 
“The consumer is still making traction with the overall recovery,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who accurately forecast the rise in spending. “Factors are falling into place for the recovery to be sustained.”
 
Stock-index futures held earlier gains following the report and Treasury securities remained lower. The contract on the Standard & Poor’s 500 Index rose 0.4 percent to 1,167.6 at 8:42 a.m. in New York. The yield on the benchmark 10-year note was 3.87 percent, up from 3.85 late on March 26.
 
 
The median estimate of 70 economists surveyed called for a 0.3 percent increase in spending, after an originally reported gain of 0.5 percent the prior month. Projections ranged from no change to a 0.6 percent advance.
 
The little change in incomes followed a 0.3 percent increase in January. The median estimate of economists surveyed called for a 0.1 percent advance. Wages and salaries were also little changed last month after climbing 0.4 percent in January.
 
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