Personal Spending Up 0.5%

  1. Home
  2. News
  3. Personal Spending Up 0.5%
Personal Spending Up 0.5%

Washington, DC, June 1, 2007--Personal spending rose in April and a measure of prices increased less than forecast, a sign American consumers will keep the economy growing this quarter without accelerating inflation.

 

The 0.5 percent rise in spending followed a 0.4 percent increase in March that was greater than previously estimated, the Commerce Department said today in Washington. The Federal Reserve's preferred measure of inflation rose 0.1 percent.

 

Economists forecast spending would rise 0.4 percent, after a 0.3 percent increase originally reported in March. Estimates ranged from gains of 0.1 percent to 0.8 percent.

 

Personal incomes fell 0.1 percent in April after a 0.8 percent gain the prior month.

 

Personal income was forecast to rise 0.3 percent, following an originally reported 0.7 percent gain for March.

 

The 0.1 percent gain in the core index, which excludes food and energy costs, followed no change the prior month. The increase was less than the 0.2 percent economists has expected.

 

That core index has gained 2.0 percent since April 2006, the smallest year-over-year gain since February 2006.

 

Adjusted for inflation, spending rose 0.2 percent in April, after no change the prior month, the report showed.

 

Because spending increased while incomes fell, the savings rate worsened to minus 1.3 percent, from minus 0.7 percent the prior month. A negative rate suggests consumers are tapping savings to maintain spending.

 

Disposable income, or the money left over after taxes, fell 0.1 percent, after rising 0.7 percent the previous month. Adjusted for inflation, disposable income decreased 0.4 percent. Disposable income rose 5.6 percent from April 2006.

 

Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, rose 0.1 percent after rising 0.6 percent. Purchases of non-durable goods decreased 0.4 percent after gaining 0.3 percent. Spending on services, which account for almost 60 percent of all outlays, rose 0.6 percent after a drop of 0.2 percent.