US Consumer Spending Down as Savings Increase

The US Commerce Department released the latest consumer spending results this morning which showed that spending remained flat in April compared to an expected increase of 0.3 percent. This is the first time since last September that monthly spending did not increase.

The report also noted that incomes increased 0.4 percent for the second month, suggesting that consumers are rebuilding savings that many people relied on to make ends meet during the recession. Some analysts however, see an eventual return to spending once employment recovers to more typical levels.

“The consumer is going along for the ride but isn’t really leading the recovery,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Because employment is growing, we’re starting to create some labor income and that is positive for future consumer spending.”

Source: Bloomberg

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