According to the Commerce Department, personal income in the United States went up 0.7% last month while consumer spending went up 0.6%.
Personal spending only went up 0.2% after inflation adjustments were made, and real disposable income went up 0.1%. Inflation climbed 0.4% while gas prices continued to rise.
Core inflation, with the exception of food and energy prices, went up 0.1%. Core prices have climbed 1.6% from the same month a year ago. They have fallen from 1.7% in the previous month. MarketWatch reports:
In March, incomes rose 0.5% while spending increased 0.9%. Spending was revised up from 0.6%.
The personal savings rate for April rose 0.4%, which was the smallest rate since October 2001.
Real spending on durable goods rose 0.8%, while real spending on nondurable goods climbed 0.2%. Real spending on services rose 0.1%.
Wages rose 0.7% in April, while proprietors’ income rose 0.9%. Income on assets rose 0.4%.
According to the Commerce Department, the GDP grew at an annual rate of 3.5% for the first quarter. The better-than-expected rate comes as a result of fewer imported goods and services than previously estimated.
“The 3.5 percent pace is really a safe and solid pace for the economy to grow. By that I mean, it is not so fast that you can have an inflationary accident and not too slow to create new jobs,” noted Stuart Hoffman, PNC Financial Services Group’s chief economist. “It is right on the economy’s speed limit.”
The rate is still lower than that of the fourth quarter of last year, which was 3.8%. Consumer spending has been down since then in what economists refer to as a “soft patch”.
Like the economy, the job market seems to be recovering as well. In April, the number of new jobs in the U.S. climbed to 274,000, compared to 146,000 in March. New claims for unemployment insurance increased last week by only 1,000 according to the Labor Department. The employment report for May will be released next week. Economists are expecting about a 175,000 increase in new jobs.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
