Saturday, March 29, 2003

Cautious consumers tighten hold on wallets

The Associated Press

WASHINGTON - Consumer spending stalled in February for a second straight month as war uncertainties, job worries and higher energy prices made people more cautious.

Spending on cars and other big-ticket items was cut sharply for the second month in a row.

Friday's Commerce Department report showed that consumer spending was flat in January and February, holding at an annual rate of $7.49 trillion.

"Consumers are growing increasingly cautious in their spending, and the income to support future spending is weakening," said Mark Zandi, chief economist at

Americans' incomes, including wages, interest and government benefits, rose by a modest 0.3 percent in February, down from a 0.4 percent advance the month before.

Although bad winter weather was a big factor dampening retail sales in February, economists said consumers are becoming more cautious in the current muddled economic climate.

In a second report Friday, the University of Michigan's consumer sentiment index for March fell to 77.6 from 79.9 in February, economists said. It marked the third month in a row confidence sank.

In February, consumers cut spending on big-ticket "durable" goods, such as cars and appliances, by 2.2 percent, on top of a 4.9 percent cut in January.

Spending on "nondurable" goods, such as food and clothes, was flat in February, compared with a 1.3 percent rise in January.

And spending on services, including gas and electric utilities, rose 0.5 percent in February, up from a 0.3 percent gain, reflecting higher energy prices.

Disposable income, or what's left after taxes, rose 0.2 percent in February, compared with a 0.4 percent advance in January.

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