The Commerce Department reported on Friday that consumer spending in the U.S. fell 1.0 percent m-o-m in February after a revised 3.4 percent m-o-m advance in January (originally a 2.4 percent m-o-m gain). Economists had forecast the reading to show a 0.7 percent m-o-m decrease.

Meanwhile, consumer income plunged 7.1 percent m-o-m in February, following a revised 10.1 percent m-o-m surged in the previous month (originally a 10.0 percent m-o-m jump). This was the largest monthly drop in consumer income on record. Economists had forecast a 7.3 percent m-o-m tumble.

The February decline in personal income was more than accounted for by a decrease in government social benefits to persons.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.1 percent m-o-m in February, following a revised 0.2 percent m-o-m advance in January (originally a 0.3 percent m-o-m gain). Economists had projected the index would edge up 0.1 percent m-o-m.

In the 12 months through February, the core PCE increased 1.4 percent, decelerating from an unrevised 1.5 percent in the 12 months through January. Economists had forecast an advance of 1.5 percent y-o-y.