WASHINGTON — Consumer spending grew at a surprisingly strong pace last month, another encouraging sign that the economy may be gaining momentum despite the hit from higher taxes and gas prices and fears of government spending cuts.
Retail sales rose 1.1 percent in February from the prior month, seasonally adjusted, thanks in large part to robust gains for cars and building materials and at Internet stores, the Commerce Department reported Wednesday. The overall sales rate increase was the biggest in five months and about double what many analysts had forecast.
Consumers did feel the pinch from higher fuel prices. Sales at gas stations jumped 5 percent last month from January, a big factor in the overall retail sales growth. Even so, after excluding consumer spending for gas and for cars, “core" retail sales still increased.
Taken together, the report suggests stronger underlying confidence and willingness to spend on the part of consumers, most likely reflecting rising stock prices, a recovering housing market and recent gains in employment and earnings.
Car and home sales are benefiting from pent-up demand as well as low interest rates, and that’s supporting business at other retailers. Sales at building material and garden supply stores rose 1.1 percent in February from the prior month.
The report raised some analysts’ hopes that consumer spending will outperform expectations this year.