WASHINGTON (AP) — Consumers earned more and spent more in February, helped by a stronger job market that has offset some of the drag from higher taxes.
The Commerce Department says consumer spending rose 0.7 percent in February compared with January. It was the biggest gain in five months and followed a 0.4 percent rise in January, which was revised up from an initial 0.2 percent estimate.
Income rose 1.1 percent last month. That followed January’s 3.7 percent plunge and December’s 2.6 percent surge. The huge swings reflected a rush to pay bonuses and dividends in December before taxes went up on high-income earners.
Sales rose last month despite an increase in Social Security taxes, which took effect in January. That reduced take-home pay this year for nearly all Americans receiving a paycheck.