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WASHINGTON -- U.S. consumers increased their spending in March at the fastest pace in three months as better weather and an uptick in income growth helped bring them back to shopping malls and car dealerships, Reuters reports.
While spending improved in March, the start of the U.S.-led war left many consumers fairly cautious. Consumer spending grew at a seasonally adjusted 0.4 percent last month, up from a 0.1 percent gain in February, a month when a series of winter storms helped restrain spending. But the latest report from the Commerce Department showed the March increase fell short of private economists' expectations for a 0.5 percent rise.
Americans' incomes also rose by 0.4 percent in March -- matching economists expectations -- following a 0.2 percent increase in February. Financial markets showed little reaction to the number. The saving rate -- measuring the portion of after-tax income consumers put away after spending -- slipped to 3.6 percent in March from 3.7 percent.
While consumers were wealthier, higher oil prices cut into their spending amid price spikes in the run-up to the March 20 start of the war. Now that oil costs have eased off their highs, economists are hopeful consumers will spend a bit more freely.
A closely watched inflation gauge, the PCE price index, rose 0.3 percent in March. But stripping out volatile food and energy costs, it rose a meager 0.1 percent. Real, or inflation-adjusted consumer spending, has been weak since the start of the year and gained only 0.1 percent in March after sliding 0.4 percent in February.