Report: Consumer spending increases for second straight month

WASHINGTON Despite the current economic climate, a new report from the U.S. Commerce Department reveals that consumer spending was up during the month of February.

The Commerce Department reported Friday that consumer spending edged up 0.2 % in February, in line with expectations. That follows a huge 1% jump in January that was even better than the 0.6% rise originally reported.

The back-to-back increases in consumer spending in January and February had followed six straight declines in spending that occurred from July through December, the Associated Press reported. Consumer spending in the fourth quarter fell at an annual rate of 4.3%, the biggest decline in 28 years, which attributed to the fall of overall activity.

Despite the spending surge, the Commerce Department also said that incomes fell by 0.2% in February, the fourth drop in the past five months. After-tax incomes also dropped (0.1%).

Consumers are urged to continue spending despite the economic state. According to reports, consumer spending accounts for about 70% of economic activity.

A price gauge tied to consumer spending rose by 0.3% in February and was up 0.2% excluding food and energy, indicating that the recession has contributed to a significant moderate in inflation pressures.