WASHINGTON — Americans' incomes and spending are not rising as rapidly as they had been, Commerce Department figures indicate, offering the latest sign that the economy is slowing to a pace that can be maintained with low inflation.
The Commerce Department reported Monday that spending climbed a mere 0.1% in February, the smallest gain in nearly a year. The pickup in personal income was larger, 0.5%, but still the weakest increase since November, when earnings were unchanged.
The department also reported that personal incomes rose less rapidly in January than previously reported. That month's increase was revised to 0.7% from 0.9%.
Analysts offered mixed opinions. Some say there is widespread evidence of a slowdown in response to higher interest rates, while others are skeptical, suggesting the easing is only a pause.
"The figures tend to reinforce the view that growth is slowing in 1995. Almost every report has come in on the soft side," said economist Mark Vitner of First Union Corp. in Charlotte, N.C.
But there could be a rebound later this year, Vitner said. "We think a pickup in consumer confidence will mean a turnaround in home and car sales in April and May," he said.
Meanwhile, the National Assn. of Purchasing Management said its closely watched index showed that manufacturing expanded at a slower pace in March.
"We may not have the pedal to the metal anymore in terms of economic expansion, but we're not hitting the brakes, either," said Barry Rogstad, president of the American Business Conference.
Executives of mid-sized companies surveyed by the group foresaw steady growth and higher investment in the second quarter of this year.
The Commerce Department said February's increase in spending was the smallest since outlays declined 0.3% in April, 1994. But the government revised upward its spending figure for January--to 0.7% from the previous 0.4%.
Consumer spending representing two-thirds of the nation's economic activity and has been a major force behind the 4-year-old economic recovery. Outlays for big-ticket durable goods such as cars and appliances declined 0.6% in February, and spending on non-durable goods such as food and fuel fell 0.5%. Spending on services rose 0.6%.
Disposable income--income after taxes--climbed 0.5% in February after gaining 0.6% the previous month.
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The purchasing managers index tracks overall business activity of more than 300 industrial companies:
Mar. 1995: 51.4%
Source: National Assn. of Purchasing Managers