Personal Income Leaps 0.9%; Consumer Spending Up 0.7%

WASHINGTON — Americans’ personal incomes rose at the fastest clip in four months during February, and consumer spending was propelled upward by a rebound in car sales, the government reported Thursday.

The Commerce Department said personal incomes advanced 0.9%, reflecting strong employment gains in the past few months. Spending rose 0.7%, up sharply from a tiny 0.1% January increase.

Economists said the new figures provided further evidence that the economy has suffered no long-run effects from the October stock market crash. Five months ago, analysts feared that consumer worries about the future would cause them to cut back on spending and could push the country into a recession.

“For people who were worried about a major consumer retrenchment, these numbers are encouraging,” said Sandra Shaber, an economist with Futures Group. “As long as income gains hold up, people will continue to spend.”

Big Economic Factor

Bruce Steinberg, an economist with Merrill Lynch, said consumer spending will rise by about 3.5% in the first quarter of this year, after adjusting for inflation, a major rebound after a spending decline in the final three months of last year.

He said consumer spending would be the major factor contributing to expected economic growth during the January-March quarter of about 2%, as measured by the gross national product.

A few months ago, many analysts worried that growth in the current quarter actually would be a negative figure, indicating that the country was headed into a recession.

Steinberg said the fear now is that consumer spending will spurt ahead at such a fast pace that production bottlenecks could occur and inflation will be rekindled. But Shaber said she did not consider this a danger because she believed that slower income growth in the months ahead will slow the growth of spending as well.