US consumer spending hits 7-month high US consumer spending, the biggest driver of economic growth, posted its biggest monthly rise for seven months in February as confidence in the economy rebounded to its highest level in more than a year. Spending, which accounts for two-thirds of the US economy, rose 0.8 per cent, more than the 0.6 per cent forecast, according to the commerce department. Higher energy costs, particularly petrol prices, raised the level of consumer spending, but even adjusted for inflation, real personal expenditure rose 0.5 per cent compared with an increase of 0.2 per cent the previous month. In February, spending on durables - goods meant to last more than three years - jumped 1.6 per cent after a 1.4 per cent rise the month before, nondurables increased 0.9 per cent, and services gained 0.6 per cent. Incomes rose 0.2 per cent over the month, the same rise as in January and below expectations of a 0.4 per cent gain. Adjusted for inflation and taxes, real disposable income decreased 0.1 per cent in February, compared with a decrease of 0.2 per cent the month before. Income gains have been fairly modest lately, in spite of strong payroll gains. The faster pace of spending growth compared with income growth meant the personal savings rate fell to 3.7 per cent, the lowest level since August 2009, from 4.3 per cent in January. January's income rise was downwardly revised to 0.2 per cent rise from 0.3 per cent. The gain in spending was revised up to 0.4 per cent from 0.2 per cent. A core inflation measure, which strips out food and energy costs, edged up 0.1 per cent last month after rising 0.2 per cent in January. In the 12 months through February, core personal consumption expenditures rose 1.9 per cent after increasing by a similar margin in January. The US Federal Reserve would like to see this measure close to 2 per cent. Separately, the University of Michigan's final March reading for the overall consumer sentiment index rose to its highest level since February 2011. The index gave a reading of 76.2 compared with 75.3 in February, as optimism about jobs and income overcame higher petrol prices. Analysts had forecast a reading of 75. The survey questions 500 households on their financial conditions and attitudes about the economy which is correlated to consumer spending. Friday's data followed gross domestic income numbers on Thursday that showed the US economy grew at an annualised rate of 4.4 per cent in the fourth quarter of 2011, suggesting the recovery may be stronger than previously thought. The Bureau of Economic Analysis left its estimate of fourth-quarter gross domestic product growth unchanged at 3 per cent. Jonathan Basile, director of economics at Credit Suisse, said: "Our tracking estimate for first-quarter GDP is now 2.5 per cent, from prior 2.2 per cent. The better spending profile - the stronger February and upward revisions to December and January - pushed our real personal consumption expenditures forecast to 2.4 per cent. Today's spending data outweighed softer results for business investment from the durable goods report earlier this week. The data plus favourable news out of Europe this morning on the permanent bailout fund pushed US stocks higher.