Today in business: 5 things you need to know

1. PERSONAL INCOME PLUMMETS, BUT SPENDING RISES

Consumers boosted their spending for the third straight month in January, even though personal income took its biggest plunge in 20 years. The Commerce Department reported Friday that incomes dropped by 3.6 percent in January after spiking by 2.6 percent in December, as companies rushed to pay dividends and bonuses before tax increase took effect on Jan. 1. "With tax hikes and spending cuts buffeting the economy," says James Marple, senior economist at TD Economics, economic growth in the first half of 2013 will remain stuck at a pace below 2 percent, which won't be enough to improve the unemployment picture. [MarketWatch, USA Today]

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2. SEQUESTER WEIGHS ON STOCKS

Stock markets got off to a rocky start around the world, after Congress failed to reach a deal to avoid $85 billion in automatic federal spending cuts before a Friday deadline. The Dow Jones Industrial Average plunged by 84 points in early trading before regaining its footing. The $85 billion in spending reductions, known as the sequester, created uncertainty that, while not sparking panic, could put a damper on the recovery and distract Congress from the hard choices needed to reduce long-term deficits, financial experts said. "If they could get this fixed, the economy is poised to take off," Bank of America Corp. Chief Executive Brian Moynihan said. [CNN]

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3. GROUPON SHARES RISE AFTER CEO FIRED

Groupon shares got a nice bounce early Friday, a sign that investors approved of the board's decision to fire Andrew Mason, the company's eccentric CEO and founder, on Thursday. Mason got the boot a day after the daily-deals service reported a worse-than-expected quarterly loss that sent Groupon's stock price plummeting by 24 percent. Groupon was once considered the next big thing among internet startups, but it has been struggling lately in the face of competition and a general cooling of enthusiasm for services offering limited-time bargains. [MarketWatch, Wall Street Journal]

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4. MANUFACTURING SURGES

U.S. manufacturing output expanded at an unexpectedly quick pace in February, the highest level since June 2011, the Institute for Supply Management reported on Friday. Offsetting the news, financial data firm Markit said new orders placed by factory purchasing managers inched down compared to January, but remained strong enough to indicate that the economy is continuing to expand. The jump in output suggested that "firms are expecting this slowdown to be temporary," said Chris Williamson, chief economist at Markit. [Bloomberg, Reuters]

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5. BEST BUY TAKEOVER FIZZLES

Estranged Best Buy founder Richard Schulze failed in his seven-month effort to line up the money to take over the struggling electronics chain. Schulze's push had presented a challenge to Hubert Joly, who was hired as chief executive last August to reverse what some analysts warned was an irreversible decline. Joly had set the deadline for an offer from Schulze that expired at midnight with no word from the former chairman. The company also announced meager quarterly sales growth but better than expected profits, which it said showed "renewed momentum" to regain business it has lost to Amazon, Apple, and other competitors. [Financial Times]