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San Francisco, CA--A 0.7 percent jump in personal spending in February may appear to signal consumer strength, but much of the increase reflects the price of goods and services going up, says a recent report from Wells Fargo Securities.

After accounting for higher prices, the increase in real spending was only 0.3 percent. On average across the United States, gasoline prices jumped 27 cents per gallon for regular unleaded from the beginning to the end of February.

Personal income got a big boost in January from the temporary cut in the payroll tax, which reduced employee contributions to Social Security. The initially reported gain of 1.0 percent in January was revised higher to 1.2 percent, and it looks as though the momentum continued in February as income picked up another 0.3 percent on the month. But energy and food prices are rising, and potential increases in local taxes cannot be ruled out later this year. The bottom line is that we are going to need stronger employment growth in order for disposable income to keep pace, says the report.

The entire report can be read or downloaded here.