"The explosion of COVID-19 infections ... is casting doubt on the magnitude of the expected surge in third-quarter consumer spending."
The March decline in spending "is the tip of the iceberg. The worst is yet to come with the April data.”
With income outpacing expenditures, consumers may have "a good amount of cushion to sustain spending if or as the economy slows."
The biggest drop in spending since 2009 confirmed expectations that the economy will slow down further in the first three months of 2019.
Inflation remains below the Fed's target "but there are indications it may be starting to pick up."
Economists see the slowdown in February as only temporary and unlikely to deter the Fed from raising interest rates again in June.
Another strong month for personal consumption boosts hopes that economic growth will rebound from the anemic second quarter.
With a 0.4% gain in June, personal consumption has showed strong increases for three straight months and again outpaced personal income growth.
The gain in personal spending is the largest since May and, along with other recent data, suggests the U.S. economy is holding steady in early 2016.
With income, consumption, and inflation trending lower, the prospects for an interest-rate hike next month may be dimming.
Personal income increased 0.4% in April but consumer spending and industrial production were soft.
