US consumer spending flat despite rising income
Sunday, 30 May 2010
WASHINGTON, May 29 (AFP): US consumer spending was surprisingly flat despite rising income in April as Americans remain cautious amid high unemployment, government data showed Friday.
Consumer spending barely rose after six consecutive monthly gains while personal income climbed 0.4 percent for the second consecutive month in April, the Commerce Department said. Spending rose by less than 0.1 percent.
Most economists had expected consumer spending to rise 0.3 percent in April from a revised 0.6 percent March and incomes to gain 0.4 percent from an identical rise the prior month. Americans however increased their savings.
The department said the US savings rate rose 3.6 percent compared with 3.1 percent rise in March.
Consumer spending is a key cog for US growth. The economy has been growing since the second half of last year after plunging into recession in December 2007.
The economy grew by a slower pace at 3.0 percent in the first quarter of this year from 5.6 percent in the last quarter of 2009.
Analysts expect consumer spending to remain sluggish as unemployment remains a thorn to growth.
"Consumers took a break from their rapid spending in April, although their spending still remains strong in light of the high unemployment rate and weaker income growth," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com.
"The near term outlook is still problematic. Wage income growth is healthy, but not robust. With unemployment near 10 percent, labor market power clearly in employers' hands, so there is little prospect for much more acceleration in wage income," Hoyt said.
Consumer spending barely rose after six consecutive monthly gains while personal income climbed 0.4 percent for the second consecutive month in April, the Commerce Department said. Spending rose by less than 0.1 percent.
Most economists had expected consumer spending to rise 0.3 percent in April from a revised 0.6 percent March and incomes to gain 0.4 percent from an identical rise the prior month. Americans however increased their savings.
The department said the US savings rate rose 3.6 percent compared with 3.1 percent rise in March.
Consumer spending is a key cog for US growth. The economy has been growing since the second half of last year after plunging into recession in December 2007.
The economy grew by a slower pace at 3.0 percent in the first quarter of this year from 5.6 percent in the last quarter of 2009.
Analysts expect consumer spending to remain sluggish as unemployment remains a thorn to growth.
"Consumers took a break from their rapid spending in April, although their spending still remains strong in light of the high unemployment rate and weaker income growth," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com.
"The near term outlook is still problematic. Wage income growth is healthy, but not robust. With unemployment near 10 percent, labor market power clearly in employers' hands, so there is little prospect for much more acceleration in wage income," Hoyt said.