RJ and Makay

After a severe recession, an increase in consumer spending would normally be cause for celebration because it suggests the economy's improving. But the 0.7% spike just reported for February by the Commerce Department isn't impressing many people, even though it's the largest consumer spending gain in four months.

Why? People spent more in February mainly because gas got a lot more expensive. In fact, half of February's 0.4% inflation uptick was due to energy costs, and economists worry that if those costs keep going up, they'll cut into household budgets enough that consumers won't be able to spend on items associated with economic growth.

In a surprise setback on the economic front, new orders for long-lasting manufactured goods — durables — fell in February, suggesting some unexpected softness in manufacturing activity and business investment plans. However, recent labor market gains are persisting, as indicated by a decline in new jobless benefit claims last week and in the four-week average for such claims to its lowest level in more than two-and-a-half years.

According to the Commerce Department, durable goods orders fell 0.9% in February after rising 3.6% in January. Economists polled by Reuters had expected durables orders to increase 1.1% last month. Excluding transportation, such orders fell 0.6% after declining 3.0% in January.

Promising news on the jobs front: Applications for unemployment benefits dropped by 22,000 last week to a seasonally adjusted 391,000 — the lowest level in two-and-a-half years. It was the third decline in jobless benefit applications in four weeks and it surpassed economists' expectations.

Furthermore, the four-week average for unemployment benefit applications is down to 402,000, the lowest since July 2008 and a sign the job market is slowly improving. A four-week average below 425,000 is often taken as a sign of modest job creation.