US consumers' income rose last month but they began a clear cutback on their spending in favor of increased savings, the Commerce Department reported today. February personal consumption expenditures rose 0.1 pct, exactly in line with the increase expected in the Thomson IFR Markets poll of economists. It was the smallest increase in 17 months "and wraps up a dismal week of consumer related data, while heightening the fear of the Federal Reserve that the credit crisis and economic slowdown is trickling down to an already overstretched consumer," said Ashraf Laidi of CMC Markets. However, after adjusting for higher prices, real consumer spending was unchanged. That would have been the third month in a row of flat personal spending -- and the net trend is unchanged -- but the Commerce Department's revisions put the January increase at 0.1 pct with an offsetting December decline of 0.1 pct. Bear Stearns economist John Ryding described consumer spending growth as "extremely sluggish in the first quarter, running at around 1 pct at an annual rate. From a demand side perspective," he said, "this puts domestic demand on course to be relatively flat in real terms once another sizeable subtraction from construction is taken out." Even if Q1 consumption holds above zero, "the plunging confidence numbers clearly point to an outright decline in the second quarter," according to Ian Shepherdson of High Frequency Economics. Personal income rose more than expected, up 0.5 pct vs a 0.3 pct increase expected. It was the the biggest increase in 7 months and followed a 0.4 pct gain in January. After adjusting for inflation and taxes, real disposable income also increased in February, rising 0.3 pct after a 0.1 pct gain.