Consumer Spending Down, Income Up

Washington, DC, June 1, 2009--Consumer spending fell in April from March, despite personal income posting the largest increase in 11 months, the Commerce Department said.

The agency said spending fell 0.1 percent after a revised 0.3 percent fall in March. That was slightly better than market expectations for a 0.2 percent fall in spending.

Personal income rose 0.5 percent, the biggest increase since May last year, after falling by a revised 0.2 percent in March. Analysts had forecast income to fall 0.2 percent in April.

Disposable income surged 1.1 percent in April, boosted by tax cuts and increased social benefit payments under the government's record $787 billion stimulus package, the Commerce Department said. Excluding the stimulus package, disposable income increased 0.7 percent in April.

Savings jumped to a record annual rate of $620.2 billion. The savings rate rose to 5.7 percent in April, the highest level since February 1995, from 4.5 percent the previous month.

Households, buffeted by job losses and falling asset values, are cutting spending on nonessential items, preferring to save any extra income.