CSBJ Daily

The Associated Press

WASHINGTON _ Consumers, jolted by a credit crisis, job cuts and soaring energy costs, turned in the weakest spending performance in 17 months during February, further evidence that the risks of a recession are increasing.

The Commerce Department said Friday that consumer spending edged up by just 0.1 percent last month, the poorest showing since September 2006. And if the effects of inflation are removed, spending was flat in February, the third consecutive month of sluggish activity.

The performance of the consumer is closely watched since consumer spending accounts for two-thirds of total economic activity. Economists said the sustained weakness in this area is one of the most worrisome signs that the economy could be tipping into a recession.

A second report showed the prolonged slump in housing, rising job layoffs, soaring energy costs and a severe credit crisis are taking their toll on consumer confidence. The Reuters/University of Michigan consumer sentiment survey dropped to 69.5 in March, the lowest reading in 16 years and down from 70.8 in February.

“Consumers are facing bad news on all fronts,” said Nigel Gault, an economist with Global Insight. “Food and energy prices are climbing ever higher, the labor market is slowing, credit is becoming tighter and household wealth is declining as house prices drop.”

While many economists believe the economy has slid into a recession, they still expect it will be short and mild, ending this summer when 130 million U.S. households start spending their rebate checks.