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Economy Title: U.S. CONSUMER SPENDING UNCHANGED IN APRIL; INCOMES UP 0.4% May 28 (Bloomberg) -- Consumer spending in the U.S. unexpectedly stalled in April as Americans used growing wages to rebuild savings. The pause in purchases compared with a 0.3 percent increase projected by the median forecast of economists surveyed by Bloomberg News and followed a 0.6 percent gain in March, Commerce Department figures showed today in Washington. Incomes climbed 0.4 percent for a second month, and the savings rate rose for the first time in four months. Increasing wages will probably help mitigate the damage from the financial turmoil caused by the European debt crisis, sustaining the U.S. economic recovery. Profits at retailers from Target Corp. to Gap Inc. are beating estimates, and hiring is picking up, giving Americans the means to boost both spending and savings in coming months. “Any improvement in spending or support to spending has to come from gains in the labor market,” Julia Coronado, a senior U.S. economist at BNP Paribas in New York, said before the report. “We are still in a pretty moderate recovery.” The median estimate was based on 77 economists surveyed. Projections ranged from a decline of 0.1 percent to a gain of 0.6 percent. The median estimate of economists surveyed called for a 0.4 percent advance in incomes. Wages and salaries in April rose 0.4 percent after climbing 0.3 percent in March. More Savings The savings rate climbed to 3.6 percent last month, the highest level since January, from 3.1 percent in March as incomes increased and purchases cooled. Today’s report showed inflation was little changed. The inflation gauge tied to spending patterns increased 2 percent from April 2009, the same as in the 12 months ended in March. The Fed’s preferred price measure, which excludes food and fuel, rose 0.1 percent in April and was up 1.2 percent from a year earlier. Adjusted for inflation, spending was also unchanged, the first time without an increase since September. Target, the second-largest U.S. discount retailer, this month said it posted first-quarter earnings that beat analysts’ projections. Chief Executive Officer Gregg Steinhafel cited a better-than-expected economic environment that boosted sales of profitable items such as clothes. The economy grew at a 3 percent annual rate in the first quarter, after expanding at a 5.6 percent pace in the last three months of 2009, figures from the Commerce Department showed yesterday. Consumer spending accelerated to a 3.5 percent pace, from 1.6 percent in the fourth quarter of last year. Employment Gains The labor market is likely to determine the pace of spending in coming months. Employers have increased payrolls in five of the past six months, culminating in a 290,000 gain in April that was the biggest gain in four years, according to figures from the Labor Department. Employment probably increased again this month, and the unemployment rate likely fell to 9.8 percent, according to the median estimates of economists surveyed before a Labor Department report due June 4. Post Comment Private Reply Ignore Thread |
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