Monday, April 30, 2012

Consumer Spending Growth Slowed Despite Income Growth

Consumer spending growth slowed in March despite a faster rate of income growth, allowing the savings rate to recover slightly. Consumers increased spending by 0.3% in March, down from 0.9% growth the previous month. Personal income growth accelerated to 0.4%, up from 0.3% in the previous two months. As a result, the savings rate rose slightly to 3.8%, up from 3.7% in February.

Consumer spending growth slowed notably from January and February’s rapid pace. Some of this slowing is inevitable as the previous month’s spending was bolstered by unseasonably warm temperatures. Durable goods spending slowed most notably, shrinking 0.3% in March after growing 2.0% in February. Nondurable goods held almost steady, growing 0.9%, down from 1.0% the previous month. Service spending growth fell as well, down to 0.1% from 0.6%.

Personal income growth accelerated in March, growing 0.4%. Wages grew at 0.3% over the month, a slowdown from the pace of 0.4% held over the previous three months. Rental, dividend, and proprietors income led the income growth in March. Disposable income rose 0.4% in the month as well.

Inflation was subdued in March, with consumer prices up just 0.2% in March.

Read the report.

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