Buyers Spend More, but Earnings Lag

Call it aspirational buying. American shoppers laid out more in February than they have in recent months, with the Commerce Department announcing Friday that consumer spending rose 0.8 percent over the last four weeks. But income grew only 0.2 percent over the same period—which means that after taxes and factoring in inflation, income for the average American actually dropped, even as they were queuing up at the registers. The increase in spending may be linked to higher gas prices and rising hiring rates, economists explained. Seventy percent of the economy’s activity is powered by consumer spending.