WASHINGTON-Americans' spending was flat for the second straight month during March as inflation headed lower, potential red flags as the Federal Reserve considers further increases in interest rates.
Personal consumption, a measure of what households spent on everything from groceries to dental care, was unchanged in March after failing to rise in February, the Commerce Department said Monday. That marked the weakest two-month stretch of spending in more than two years.
Personal income--a broad measure of Americans' earnings, investment returns and government assistance--rose 0.2% in March after climbing 0.3% in February.
Economists surveyed by The Wall Street Journal expected a 0.2% rise in spending and a 0.3% increase in income.
The report showed that the Fed's preferred measure of inflation weakened after briefly hitting the central bank's annual 2% target in February.
The price index for personal consumption expenditures declined 0.2% in March from a month earlier. Core prices, which exclude food and energy components, fell 0.1%. It was the first time overall prices fell since February 2016 and the first drop in core prices since September 2001.
From a year earlier, overall prices increased 1.8% and core prices rose 1.6%.
Fed officials believe inflation will settle near its target later this year.
The spending figures offer the latest evidence the economy stumbled in the early months of the year. The government reported last week that gross domestic product, a broad measure of goods and services produced across the U.S., grew at a 0.7% pace in the first quarter. Weak consumer spending was among the main factors.
But many economists expect growth to rebound this spring. The broader trend of steady but sluggish spending remains in tact.
The Commerce Department report on personal income and spending can be accessed at http://www.bea.gov/newsreleases/rels.htm.
(END) Dow Jones Newswires
May 01, 2017 08:45 ET (12:45 GMT)