Consumer spending up for second consecutive month

Washington, D.C. Consumers increased spending for a second straight month, even though their incomes slipped due to continuing massive layoffs, according to new government findings.

The Commerce Department reported Friday that consumer spending crept up 0.2% in February, in line with expectations. That follows a 1% jump in January that was even better than the 0.6% increase originally reported.

But the report says incomes fell by 0.2% in February, the fourth drop in the past five months, declines that reflected the sizable number of job layoffs that have been occurring because of the recession.

In other findings, the personal-savings rate dipped slightly to 4.2% in February, compared with 4.4% in January. It is the first time that the savings rate has been above 4% for two consecutive months in more than a decade. Economists believe that the recession will continue prompting consumers to do more to trim spending and boost their savings.

The back-to-back increases in consumer spending in January and February had followed six straight declines in spending that occurred from July through December. Consumer spending in the fourth quarter fell at an annual rate of 4.3%, the biggest decline in 28 years.

Many economists believe that the gross domestic product will drop by around that amount in the current January to March period and will continue falling in the spring although at a slower pace. Many analysts are not looking for the current recession, which began in December 2007, to end until the second half of this year.