Output slips in February; people outspend incomes

Two unsettling government reports showed that US factory output slumped for the first time in seven months in February, while Americans still spent money faster than their income grew. "It is clear the economy is starting to stagnate again," said Lawrence Chimerine, chief economist for the private consulting firm of Chase Econometrics, Philadelphia.

The Federal Reserve Board said the combined output of factories, mines, and utilities fell 0.5 percent in February, the first decline since July.

In another report, the Commerce Department said the combined income of all Americans grew at a rate of 0.7 percent in February, down from a 1 percent pace the previous month. More troubling in the eyes of some economists was the rate of spending by Americans in February. Spending rose at a rate of 1.3 percent, almost twice as fast as income was growing.

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