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U.S. consumer spending rose for a second consecutive month in February and sentiment edged up in March, according to reports on Friday that backed views that the worst of the recession may be over. Spending increased 0.2% after rising by an upwardly revised 1.0% in January, the Commerce Department said. The big adjustment to January’s figure, which was previously reported as a 0.6 % gain, suggested that consumer spending rebounded in the first quarter after a big drop at the end of last year, analysts said.”It looks as though spending will manage an increase of just over 1.0 % at an annual rate in the first quarter,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. Consumer spending, which accounts for over two-thirds of US domestic economic activity, fell at a 4.3% annual rate in the fourth quarter, the biggest decline since 1980. Spending dropped 3.8 % in the July/September 2008 period.

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U.S. consumer confidence slipped to a record low in January, and governments around the world offered further help to banks and industries battered by the global financial crisis. U.S. industry group Conference Board said its sentiment index fell to 37.7 from a revised 38.6 in December, confounding forecasts for a small uptick after Europe’s biggest economy, Germany, showed a surprise rise in business sentiment.

Japan and Britain widened their efforts to help industries hurt by slowing economies, with the UK offering loan guarantees for automakers, while sources said Russia was preparing more support for banks. Japan enacted a US$53B extra budget and said it would offer a lifeline to the small- and medium-sized companies at the heart of the world’s second-largest economy with a US$16.7B fund to buy stakes. Britain announced it would guarantee up to 2.3B pounds (US$3.25B) of loans to the car industry, much of which is foreign-owned, including Ford Motor Co, Honda Motor Co and Nissan Motor Co..France and Italy are also planning aid while Germany and the United States have already announced plans to support automakers. In Russia, sources told Reuters that the government was set to help top bank Sberbank and other lenders with a second bailout package worth more than $27 billion.

One government source said Russia planned to offer Sberbank a 500B roubles subordinated loan. Last week, US Secretary of the Treasury, Timothy Geithner set to work overhauling a US$700B program to rescue the world’s largest economy from the worst financial crisis since the Great Depression. He is expected to propose new steps to unclog credit markets in the next two weeks. Canada’s budget and stimulus package will include incentives for home renovations and a promise of relief for credit card borrowers as well as tax breaks for middle- and lower-income Canadians, the Globe and Mail newspaper reporter.

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Industry managers anticipate the performance of their businesses in a recession. The research shows us that during the 1990–91 and 2001–02 downturns the U.S. consumer prioritized spending instead of actually cutting it in all sectors. Consumer spending did drop in discretionary areas, i.e., dining out, personal care products, and charitable donations, but spending on groceries, reading materials, and other options that substitute for more expensive ones rose, as did spending on insurance, health care, and education. Most analysts do not believe that this world recession will last long time because the financial system is much stronger, and globally linked. The majority view is that the recovery will begin in Q-2/Q-3 2009 and will be well underway by Year End 2009. Note: the classic definition of recession as identified by the National Bureau of Economic Research is two consecutive periods of negative economic growth.

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