INSTANT VIEW - U.S. consumer spending up 0.2 percent

NEW YORK (Reuters) - U.S. consumer spending rose for a second straight month in February, while incomes reversed the previous month's gains, government data showed on Friday.

KEY POINTS: * The Commerce Department said spending increased by 0.2 percent, after rising by a revised 1 percent in January, previously reported as a 0.6 percent increase. * After adjusting for inflation, consumer spending in February fell 0.2 percent. * Incomes fell by 0.2 percent after January's revised 0.2 percent rise. * Analysts polled by Reuters had forecast spending to rise by 0.2 percent and incomes to fall 0.1 percent. * Savings fell slightly to an annual rate of $450.7 billion. * The savings rate was at 4.2 percent in February, indicating that households were still remaining frugal. * Prices edged up in February, with the overall personal consumption expenditures price index rising 1 percent on a year-over-year basis from 0.8 percent in January. * Excluding food and energy, the index rose 1.8 percent after gaining 1.7 percent in January.

COMMENTS:

ROBERT BLAKE, SENIOR CURRENCY STRATEGIST, STATE STREET GLOBAL MARKETS, BOSTON:

"There were some revisions to the prior month. In real terms, January was now even stronger than we first thought, but the February number in real terms was actually weaker. Net-net, we are looking at possible spending in the first quarter in real terms that was positive, possibly, a 1 percent gain...which would signal that the consumer has gone a long way to recover from the absolute calamity in the second half of last year when consumer spending dropped 4 percent at an annual rate. So it was a positive report.

"The markets in general don't put as much into this report as economists. It's not a big market-mover, but it will affect economist forecasts pretty significantly for GDP...for the second and third quarters. It basically signals that the economy could stabilize by the middle of the year."

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

"Personal spending was reasonably strong with upward revisions but that was to be expected given the retail sales data we have already seen. The fact that personal spending has outpaced income in the last two months raises the question whether it can be sustained. I would not say we have seen a bottom, the economy is probably not declining as quickly as it was, but I think the economy is still declining. I think consumer spending could manage a marginal increase in the first quarter but I don't think we can be confident there will be another increase in the second quarter -- there was exaggerated weakness in the fourth quarter and we have seen a bit of a correction in the first quarter."

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO, NEW YORK:

"The PCE itself didn't capture the recent upswing in commodities, so I don't think it tells us anything about inflation. More of interest is the savings rate, which is still well up from the lows, but only halfway to where it needs to be before the consumer balance sheet is in better health. The cost of that, however, is a decrease in spending.

"There's nothing in the report that's market moving, as evidenced by the futures, which haven't budged."

SCOTT BROWN, CHIEF ECONOMIST, RAYMOND JAMES & ASSOCIATES, ST PETERSBURG, FLORIDA:

"The core price index was on the high end of expectations. This will fan inflation fears. The Fed is sowing the seeds of future inflation."

MARKET REACTION: STOCKS: U.S. equity index futures steady at lower levels after consumer spending, PCE data. BONDS: U.S. Treasury debt prices steady at higher levels. DOLLAR: U.S. dollar little changed.