Both US personal income and consumer spending rose in February, the Commerce Department said Friday.
Total personal income increased by 0.8%, or $194.7 billion, which is driven primarily by wage increases and transfer payments.
Consumer spending rose 0.4% last month, or $87.8 billion. This profit was driven by an increase of $56.3 billion in commodity spending and a increase of $31.5 billion in services spending. Adjusted to inflation, actual consumer spending has increased by 0.1%, indicating that demand remains stable despite inflation continuing to strain purchasing power.
Manufacturing wages rose 1%, while services sector wages grew 0.4%. Strong growth in manufacturing wages will occur as President Trump continues his efforts to stimulate US manufacturing, a central component of his economic policy agenda, aimed at boosting middle class revenue and strengthening the industrial base. They may indicate an increase in demand for manufacturing workers as companies increase domestic production, in the hopes of avoiding tariffs on imports.
Disposable personal income, which measures post-tax income, rose 0.9% in February, while inflation-adjusted disposable income increased 0.5%. Despite inflationary pressures continuing to challenge household budgets, steady rise in income and expenditures is expected to support wider economic growth.
The most recent data highlights a broader trend in economic resilience where income and spending growth outweighs consumer sentiment. Economists point out that wage and income growth is a more reliable indicator of economic health than the consumer trust survey, which has been pessimistic since mid-2021.
Even as sentiment remains restrained, hard data continues to refer to economic resilience.
