U.S. Consumer Spending Slowed In March
WASHINGTON (AP) -- Americans increased their spending more slowly in March, suggesting some could be worried about the economy.
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.
Still, after-tax income when adjusted for inflation increased just 0.2 percent in March. The tiny gain followed two months of declines.
Consumer spending accounts for 70 percent of economic growth. It rose 2.9 percent in the January-March quarter -- the fastest pace in more than a year. Consumers could be cutting back because of the weak income gains and a slowdown in hiring.
The government reported Friday that the overall economy grew at an annual rate of 2.2 percent in the January-March quarter, a slowdown from growth of 3 percent in the October-December period. That was mainly because of government budget-cutting and weaker business investment.
Some economists worry consumers can't keep spending as freely as they did in the first three months of this year without bigger pay raises. After-tax income rose just 0.6 percent in the first three months compared with a year earlier. That was the smallest pay increase in two years.
People spent more in part because they saved less. Some economists worry that people won't keep spending more unless their income grows.
A healthy job market could change that. But the economy created just 120,000 jobs -- half the pace of the previous three months.
The government will release the April jobs report on Friday. Economists predicted the economy added 173,000 jobs, slightly better than March's figures but well below the pace from December through February.
One positive change since the winter: gas prices appear to have peaked. That would give consumers more to spend elsewhere.
The nationwide average for a gallon of regular gasoline stood at $3.83 on Friday, down eight cents from a month ago, according to AAA's fuel gauge report.