Consumer spending rose at its fastest rate in four months in February—but that’s in large part due to rising gas prices. Consumer spending climbed 0.7%, while personal income rose 0.3% following January’s 1.2% jump, the AP notes. Both gains reflected a Social Security tax cut, which boosted take-home pay. But if energy prices keep climbing, household budgets will fall, and so will spending, economists say.
With inflation removed, spending only rose 0.3%, suggesting that higher-priced goods are cutting into spending power. The data provides “yet more evidence that higher prices are denting economic growth,” said an expert. (Read more consumer spending stories.)