Commerce: With income boost, consumers increased spending

The job market’s revival also is probably helping boost spending and, in turn, the economy, which is still battling other head winds. Consumer spending is a key driver of economic growth, accounting for 70 percent of activity. 

{mosads}The labor market has produced an average of 200,000 jobs a month since November, and that could continue in March. 

The government report is scheduled for release in a week. 

Consumers’ incomes experienced big swings in the final two months for the year, as businesses paid out bonuses and dividends before taxes increased on Jan. 1. 

The boost in incomes also helped lift the savings rate to 2.6 percent last month, up from 2.2 percent in January.

A consistent increase in spending through the first three months of the year could help boost gross domestic product. 

The economy expanded at an anemic 0.4 percent rate in the October-December quarter, but economists are more optimistic about first-quarter results, which could hit as high as 3 percent. 

Meanwhile, prices increased 1.3 percent compared with the same period last year, but that is still below the Federal Reserve’s 2 percent inflation target.