U.S. Consumer Spending Declines in April

spendioThe Commerce Department reported on Friday that U.S.consumer spending in April dropped 0.2 percent, the lowest level since May of 2012 and lower than last month’s revised 0.1 percent increase.

Economists were expecting a 0.1 percent increase for April.

The decline in consumer spending, which represents nearly 70 percent of business activity in the economy, is due in part to weak consumer incomes and slightly lower spending for energy and car sales.

Wages and salaries were unchanged for April.

The new data also showed that personal savings rate continued at 2.5 percent, close to a five-year low.

The weaker consumer spending reveals some risks to the U.S. economy as the fiscal drag takes root with the sequester cuts and higher taxes, even with home prices increasing and many American homeowners finding some relief with their home values.

Yesterday the Commerce Department released some revised US GDP figures for the 1st quarter in 2013 which showed that the U.S. economy grew at 2.4 percent annualized rate, revised from 2.5 percent.

GDP for the second quarter in 2013  is expected to decrease to between 1.5 percent and 2.2 percent and then pick up in the second half of the year.

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