U.S. Consumer Spending Down in April; Income and Savings Up

U.S. Consumer Spending Dropped in April On Monday, June 1, 2015, the Bureau of Economic Analysis (BEA) reported U.S. consumer spending and personal income data for the month of April. (Source: Bureau of Economic Analysis, June 1, 2015.)

Consumer expenditure dropped in April. Personal consumption expenditures (PCE) decreased by $2.6 billion, or less than 0.1%.

In April, personal income increased by $59.4 billion, or 0.4%; and disposable personal income (DPI) increased by $48.8 billion, or 0.4%.

Disposal income, total personal income minus current personal taxes, rose 0.3% in April after adjusting for inflation. Disposal income fell 0.2% in March but rose by 0.3% and 0.6% in February and January, respectively.

Personal income was flat in March, but rose by 0.4% and 0.3% in February and January, respectively. Wages and salaries increased by $17.7 billion in April, an increase of 0.2% from the prior month. Private wages and salaries increased by $15.7 billion, compared to an increase of $8.4 billion.

Government wages and salaries increased by $2.0 billion, compared to an increase of $1.0 billion in March.

With income slightly increasing and spending remaining flat in April, the personal savings rate climbed to 5.6% in April, compared to 5.2% in March. Low gas prices have helped consumers use the extra money to pay down their debt and grow their savings.

According to the report, the overall U.S. economy shrank in the first quarter of 2015 and U.S. gross domestic product (GDP) declined at an annual rate of 0.7% in the first three months of 2015. (Source: Bureau of Economic Analysis, last accessed May 29, 2015.)

After a slow start to the year, where nearly two-thirds of the U.S. economy depends on consumer spending, stalling consumer purchases may put the entire U.S. economy at risk.

Consumer expenditures were expected to remain flat due to the weak durable goods sales, retail sales, and auto sales reported last month.

Although U.S. consumer spending posted its weakest performance in the last three months, a strong gain in personal income growth should help future spending.