US consumer spending down for the first in a year in April
31 May 2014
US consumer spending was down for the first time in a year in April, though, there were signs inflation was stirring as an inflation gauge rose fastest since November 2012, Reuters reported.
According to the commerce department consumer spending was down 0.1 per cent after increasing a revised 1.0 per cent in March, which saw the largest increase since August 2009.
The decline, last month, came as the first since April last year. Spending was earlier reported to have risen 0.9 per cent in March.
Economists polled by Reuters had forecast consumer spending, which accounted for over two thirds of US economic activity, increasing 0.2 per cent in April.
According to commentators, the decline would likely not change expectations for a strong bounce-back in growth in the second quarter after the economic contraction in the January-March period for the first time in three years.
Even though demand cooled, inflation was rising and a price index for consumer spending was up 0.2 per cent last month after rising by the same margin in March.
Household purchases were down unexpectedly 0.1 per cent, the first decline in a year, following a 1 per cent gain the prior month that was the strongest since August 2009, commerce department figures showed on Friday.
The news was worse after accounting for inflation: with spending down the most since September 2009 as income growth fell.
Bloomberg quoted Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford as saying, the risk at this point was that the consumer was falling back into a pattern of mediocre spending growth.
Stanley who had correctly predicted the decline lowered his second-quarter growth forecast to 3.3 percent from 3.5 per cent. He said one needed to see more wage growth.
Incomes were up 0.3 per cent in April after rising 0.5 per cent with wages and salaries increasing the least this year.
Consumers might also be getting less sanguine about their financial situations due to limited pay gains and the economy according to other data.
The commerce department yesterday reported that the economy contracted at a 1 per cent annualised rate from January through March, falling for the first time in three years, as companies added to inventories at a slower
