U.S. consumer spending rose in February and personal income rebounded, the government said Friday in a report that provided further evidence that economic activity accelerated in the first quarter, even though some of the increase in consumption reflected higher gasoline prices. The Commerce Department said consumer spending increased 0.7 percent last month after a 0.4 percent gain in January. After adjusting for inflation, consumer spending was up 0.3 percent in February after advancing by the same amount the previous month. While consumers paid 35 cents more per gallon (3.8 liters) of gasoline last month, they also purchased long-lasting manufacturing goods like cars and spent more on services, due to a rebound in income growth. Personal income increased a strong 1.1 percent after plunging 3.7 percent in January. A sustained pace of steady job gains is beginning to increase wages, which should help to provide some relief to households from higher taxes and support economic growth. Personal income in December was sharply higher because of a rush to pay stock dividends and bonuses before tax increases took effect at the start of the new year. A 2 percent payroll tax cut expired in January, and tax rates for the wealthy also rose. However, data on employment and factory activity so far has shown little sign that the tighter fiscal policy has limited the economy. First-quarter gross domestic product (GDP) estimates range as high as a 3.2 percent annual rate. The economy grew at only a 0.4 percent rate in the fourth quarter of 2012.
