US consumer spending, inflation rise

Inflation ate up much of the increase in consumer spending in February. Bloomberg reports:

Americans increased spending more than forecast in February as incomes climbed, easing concern that rising food and fuel costs might derail the consumer demand that makes up 70 percent of the U.S. economy.

Purchases increased 0.7 percent, the most since October, after advancing 0.3 percent the prior month, Commerce Department figures showed today in Washington...

The report also showed incomes increased 0.3 percent, less than projected...

The price gauge tied to spending patterns increased 1.6 percent from February 2010, compared with a 1.2 percent gain in the 12 months ended in January, today’s report showed.

The Fed’s preferred price measure, which excludes food and fuel, rose 0.2 percent for a second month, and was up 0.9 percent from a year earlier, the most since October.

Adjusted for inflation, which are the figures used to calculate gross domestic product, consumer spending rose 0.3 percent after little change in January. Increasing demand for durable goods, such as autos, led the gain.

Disposable incomes, or the money left over after taxes, dropped 0.1 percent after adjusting for inflation, the first decrease since September and a reminder of the challenge represented by rising food and energy costs. Real disposable income climbed 0.5 percent in the prior month.

Meanwhile, the housing market had positive news for a change.

An index of pending home sales increased 2.1 percent in February after a 2.8 percent drop the prior month, figures from the National Association of Realtors showed today. The data indicates the U.S. housing market is having trouble recovering as foreclosures mount.

US stocks fell anyway on Monday.

The Standard & Poor’s 500 Index fell, erasing earlier gains in the final 20 minutes of trading, as concern grew that Japan is failing to contain hazardous materials at its damaged nuclear plant. The gauge dropped 0.3 percent to 1,310.19 at the 4 p.m. close in New York after climbing as much as 0.5 percent.

Reuters reports the latest findings from the Japanese nuclear crisis:

Plutonium found in soil at the crippled Fukushima nuclear complex heightened alarm on Tuesday over Japan's protracted battle to contain the world's worst atomic crisis in 25 years.

Tokyo Electric Power Co (TEPCO) said the radioactive material -- a by-product of atomic reactions and also used in nuclear bombs -- had been found in soil in five places at the plant, hit by an earthquake and tsunami on March 11.