Highlights
Personal income rose a respectable 0.3% in February, down from a 0.7% spike in January that was fed by government-related payments. Wages & salaries rose 0.4% in February, in line with their firm trend.

Consumption was lower in the month, up 0.1% vs. much higher gains in recent months including a 0.8% gain in January. The slowdown reflects a 1.9% dip in durables spending tied to car sales and a dip in non-durables tied in part to price changes for gasoline. Services spending was actually much higher in the month, up 0.9% and well above trend. In fact, overall consumption in the first two months of the year is well above the fourth quarter, up at an adjusted annual rate of 4.5% vs. 0.9% in the fourth quarter and pointing to strong GDP growth.

The savings rate posted yet another decline, down 0.5% and a factor that will limit future consumer spending. Savings have now contracted in eight of the last nine months.

The biggest news in the report was tame inflation readings including an unchanged reading in the overall PCE index and a 0.1% gain excluding energy and food. The year-on-year rise for the PCE, which in yesterday's revised GDP data showed a sharp 2.4% gain, was up only 1.8% -- back under the 2.0% limit set by Federal Reserve policy makers.

Bonds firmed in reaction to the data, specifically the core price reading. Other markets are not likely to show much reaction. The report points to more of the same: solid income gains and solid consumption unfortunately fed in part by savings.