Retail sales climbed 1.4 percent last month, the largest increase since November, suggesting renewed buoyancy in consumer buying.
The strength of the February spending figures surprised economists who thought that economic activity was beginning to slow. However, consumer spending numbers have been erratic in recent months, following the steady, strong surge in consumer spending this time last year.
White House spokesman Larry Speakes said the increase was "outstanding" and that "people are emerging from the winter season with an economic strength that is showing up at the cash register."
The February increase contrasted with a rise of 0.5 percent in January, the Commerce Department said.
Automobile sales remained strong in January, but excluding those purchases, retail sales rose 1.7 percent, the sharpest rise since September, Commerce said.
"The advance in retail sales should help bring retailers' inventories down more in line with volume and clear the way for further growth in domestic output and employment," said Commerce Secretary Malcolm Baldrige. "With consumer confidence high and employment and incomes rising, retail spending should continue to grow."
Consumer spending is important because it makes up more than 60 percent of the nation's gross national product, the main measure of output of goods and services. Economists said they expect consumer spending to continue to grow moderately this year, at about a 3.5 percent rate compared with 4.2 percent last year.
Risks to that forecast are slightly higher inflation, a decline in savings, a rise in interest rates and an increase in the debt burden -- the ratio of consumer debt outstanding to disposable income.
The record for that ratio was 17.8 percent in 1979. It climbed as high as 17.4 percent in December 1984, according to Data Resources Inc. Generally, when debt burdens are high, consumers stop spending until their personal finances are in better shape, economists said.
However, DRI said consumers could increase their debt burdens beyond the record for several reasons. Credit cards are being used increasingly, and maturities on consumer loans are being lengthened to lower monthly payments, DRI said.
Additionally, alternative debt instruments such as variable rate loans are being used, and many states have raised usury ceilings that in the past have constrained lending activity, DRI said.
Other factors affecting continued consumer spending are increases in employment and higher disposable incomes. Consumer confidence also remains high, according to economists.
"Consumers are still alive and well," said Sandra Shaber, director of consumer economics at Chase Econometrics. "Consumers are not staggering around with a debt burden," and consumer spending should remain moderately strong through the fall, Shaber said.
She attributed the improvement in retail sales to a rebound from low levels of spending activity late last year. The high rates of spending on furniture, clothing and other soft goods last month will not be sustained and should not overheat the economy, she said.
Sales of durable goods increased 0.9 percent in February. Automotive sales rose 0.4 percent following a 4.1 percent increase in January, marking the fifth monthly rise in the past six months, the Commerce Department said.
Sales of building materials fell 1.5 percent, and furniture group sales rose 2.3 percent following a 3.4 percent decline in January.
Durable goods sales rose 1.7 percent in February, the sharpest rise since September.