VOL. 127 | NO. 85 | Tuesday, May 01, 2012
Consumer Spending Slowed in March, Income Rose
By MARTIN CRUTSINGER
WASHINGTON (AP) — Americans increased their spending more slowly in March, suggesting some are worried that their paychecks aren’t growing fast enough.
The Commerce Department said Monday that consumer spending increased just 0.3 percent last month after a 0.9 percent gain in February.
Income grew 0.4 percent following a 0.3 percent gain in February. But after-tax income when adjusted for inflation increased just 0.2 percent in March. The gain followed two months of declines.
Consumer spending, which accounts for 70 percent of economic growth, rose 2.9 percent in the January-March quarter — the fastest pace in more than a year. The increase was a bright spot in an otherwise weak first quarter for economic growth.
But Paul Dales, senior U.S. economist at Capital Economics, noted that stronger spending in January and February drove the quarterly increase. And consumers spent more while saving less, which suggests they cannot sustain their spending pace without better pay.
“Real incomes will need to grow at a faster rate to prevent consumption growth from slowing,” said Dales.
In March, consumers spent 0.9 percent more on non-durable goods, such as clothing. Spending on durable goods, such as cars and appliances, fell 0.3 percent. Spending on services such as utilities and rent was mostly flat.
An inflation gauge tied to consumer spending rose a modest 0.2 percent in March. Over the past 12 months, the index is up 2.1 percent, just above the Federal Reserve’s 2 percent inflation target
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.