Consumer spending ticked up slightly in February

As a wise woman once said: “Ain’t about how fast I get there / Ain’t about what’s waiting on the other side / It’s the climb.” Even if the climb is…extremely minimal.

Consumer spending in the US climbed slightly in February as the war in Iran threatens to push inflation higher.

While consumer spending ticked up $103.2 billion, or 0.5% on a monthly basis, when adjusted for inflation, it rose just 0.1%, according to a report the Bureau of Economic Analysis released Thursday.

“Make no mistake, households are increasingly running on fumes,” Greg Daco, EY-Parthenon chief economist, wrote in a report, per CBS News.

The personal consumption expenditures index climbed 0.4% from January and 2.8% YoY. Core PCE, the inflation measure preferred by the Federal Reserve, which excludes more volatile food and energy costs, also rose 0.4% in February, but increased 3% YoY.

The bulk of consumer spending’s rise came from a rally in motor vehicle and vehicle parts purchases. February’s reading, which tracked a $58.7 billion increase in spending for all types of goods, marked the first time in three months that spending on goods climbed, according to Bloomberg.

Perceptions. But that’s not to say the US consumer is feeling particularly spend-y. For starters, there’s not much to spend: Real disposable income dipped 0.5% in February, per the BEA.

The Conference Board’s Consumer Confidence Index edged upward in March, but two of the components of its Expectations Index fell—perceptions of the labor market and household income conditions six months from now.

Dana M. Peterson, The Conference Board’s chief economist, said consumers’ write-in responses to the Confidence Index leaned toward pessimism. “Comments about prices and the cost of goods suggest that the cost of living remained at the top of consumers’ minds. As the war in Iran overlapped significantly with the survey sample period, comments about oil/gas and war/conflict spiked, while specific mentions of trade and tariffs decreased notably.”

Even before the war in Iran broke out, University of Michigan’s closely watched consumer sentiment survey dropped to its lowest reading of the year. A slight uptick in sentiment was “completely erased” following the start of the war in Iran, according to Joanne Hsu, the survey’s director.

“When households are in the midst of or are anticipating financial hardship, they pull back on spending in an act of self-preservation,” Elizabeth Renter, senior economist at NerdWallet, told Bloomberg. “This can drive real changes to the larger economy, in the form of slower growth.”