Personal income, consumer spending and consumer prices all rose 0.2% in April 2008, the U.S. Commerce Department announced Friday -- a report that suggests the economy slowed to a crawl as tax rebate checks started to arrive.
Economists surveyed by Bloomberg News had expected to 0.2% increases in both consumer spending and personal income in April 2008.
Further, it was the fifth straight month of sluggish consumer spending performance. Also, in real terms, employee compensation declined 0.1%, its first decline in 12 months. Real disposable incomes are up 1.2% in the last 12 months.
Economist Peter Dawson said the April 2008 consumer spending statistic was not a surprise. "Consumers are cutting back, given the large increases in their monthly expenses for food and gasoline, so a 0.2% spending rise is a bit of an achievement," Dawson said. "It could have been much lower, given the lack of improvement in purchasing power."
Meanwhile, inflation slowed in April 2008. Consumer prices rose 0.2% and are up 3.2% in the past 12 months. Core prices, which exclude the often-volatile food and energy components, increased 0.1% in April 2008 and have risen 2.1% during the past year. The 2.1% year-over-year core price increase remains just slightly above the U.S. Federal Reserve's 'comfort zone' for core inflation.
Economic Analysis: A statistically-neutral month regarding income and spending. Nevertheless, the 0.2% rise in consumer spending is a point of caution for the U.S. Federal Reserve because it's the fifth straight month containing a sub-par performance -- further evidence of a slowdown in consumer demand and the U.S. economy. Core inflation remains modest, hence the Fed is likely to remain focused on stimulating economic growth -- with a bias toward at least keeping short-term interest rates at current levels, if not lowering them -- provided there's no up-tick in core inflation in Q3 2008.
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Reader Comments (Page 1 of 1)
5-30-2008 @ 11:17AM
Jim said...
What a joke!!!! No wonder we don't get accurate infromation. The checks did not go out until May.
6-14-2008 @ 10:34PM
GoBoilers said...
Don't live your life as a slave!
http://www.beyondthemargin.net/2008/06/life-as-slave.html