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Consumer spending in the U.S. climbed less than forecast in April as food and fuel prices rose, a sign that faster income gains are necessary to boost the biggest part of the economy.
Purchases rose 0.4 percent after a revised 0.5 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The increase compared with the 0.5 percent median estimate of economists surveyed by Bloomberg News. Incomes climbed 0.4 percent, matching the median forecast.
Retailers like Wal-Mart Stores Inc. are reporting slower U.S. sales as households feel the pinch of grocery and energy bills. Chairman Ben S. Bernanke is among Federal Reserve officials who predict the acceleration in commodity prices will be temporary.
“The recovery still lacks vigor,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Incomes have struggled to keep pace with inflation recently.”
Estimates from 81 economists surveyed by Bloomberg ranged from gains of 0.3 percent to 0.6 percent after a previously reported 0.6 percent gain the prior month.
The Commerce Department revised the March income reading to 0.4 percent from a previously reported 0.5 percent.
Wages and salaries increased 0.4 percent in April after gaining 0.3 percent a month earlier.
Inflation-Adjusted Incomes
Disposable incomes, or the money left over after taxes, were little changed for a second month after adjusting for inflation. The savings rate held at 4.9 percent, matching the March reading as the lowest since October 2008.
Today’s report also showed inflation has picked up from a year ago. The gauge tied to spending patterns increased 2.2 percent from April 2010, the biggest 12-month gain in a year.
The Fed’s preferred price measure, the so-called core inflation reading that excludes food and fuel, rose 1 percent in April from a year earlier, the most since September, compared with the 0.9 percent advance in March.
Some U.S. companies are citing commodity costs as contributors to profit declines. Polo Ralph Lauren Corp. (RL), the retailer of its namesake brand clothing, fell the most in more than a year earlier this week after it reported a 36 percent drop in quarterly profit, missing analysts’ estimates.
Roger Farah, president and chief operating officer of the New York-based firm, said during a May 25 analyst call that the apparel maker is facing “unprecedented inflationary pressures.”
Spending, Prices
Today’s report also showed that spending adjusted for inflation, which are the figures used to calculate gross domestic product, rose 0.1 percent in April for a second month.
The economy began 2011 on a weaker note, expanding at a 1.8 percent annual rate in the first quarter after a 3.1 percent gain in the final three months of 2010, Commerce Department figures showed yesterday. Consumer purchases rose at a 2.2 percent pace, less than forecast, following a 4 percent gain the previous quarter.
Americans may find it difficult to boost spending as they pay high prices for fuel. The cost of a gallon of regular gas averaged $3.81 in April after $3.54 the prior month, according to AAA, the nation’s biggest motoring organization.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.netConsumer spending in the U.S. climbed less than forecast in April as food and fuel prices rose, a sign that faster income gains are necessary to boost the biggest part of the economy.
Purchases rose 0.4 percent after a revised 0.5 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The increase compared with the 0.5 percent median estimate of economists surveyed by Bloomberg News. Incomes climbed 0.4 percent, matching the median forecast.
Retailers like Wal-Mart Stores Inc. are reporting slower U.S. sales as households feel the pinch of grocery and energy bills. Chairman Ben S. Bernanke is among Federal Reserve officials who predict the acceleration in commodity prices will be temporary.
“The recovery still lacks vigor,” Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “Incomes have struggled to keep pace with inflation recently.”
Estimates from 81 economists surveyed by Bloomberg ranged from gains of 0.3 percent to 0.6 percent after a previously reported 0.6 percent gain the prior month.
The Commerce Department revised the March income reading to 0.4 percent from a previously reported 0.5 percent.
Wages and salaries increased 0.4 percent in April after gaining 0.3 percent a month earlier.
Inflation-Adjusted Incomes
Disposable incomes, or the money left over after taxes, were little changed for a second month after adjusting for inflation. The savings rate held at 4.9 percent, matching the March reading as the lowest since October 2008.
Today’s report also showed inflation has picked up from a year ago. The gauge tied to spending patterns increased 2.2 percent from April 2010, the biggest 12-month gain in a year.
The Fed’s preferred price measure, the so-called core inflation reading that excludes food and fuel, rose 1 percent in April from a year earlier, the most since September, compared with the 0.9 percent advance in March.
Some U.S. companies are citing commodity costs as contributors to profit declines. Polo Ralph Lauren Corp. (RL), the retailer of its namesake brand clothing, fell the most in more than a year earlier this week after it reported a 36 percent drop in quarterly profit, missing analysts’ estimates.
Roger Farah, president and chief operating officer of the New York-based firm, said during a May 25 analyst call that the apparel maker is facing “unprecedented inflationary pressures.”
Spending, Prices
Today’s report also showed that spending adjusted for inflation, which are the figures used to calculate gross domestic product, rose 0.1 percent in April for a second month.
The economy began 2011 on a weaker note, expanding at a 1.8 percent annual rate in the first quarter after a 3.1 percent gain in the final three months of 2010, Commerce Department figures showed yesterday. Consumer purchases rose at a 2.2 percent pace, less than forecast, following a 4 percent gain the previous quarter.
Americans may find it difficult to boost spending as they pay high prices for fuel. The cost of a gallon of regular gas averaged $3.81 in April after $3.54 the prior month, according to AAA, the nation’s biggest motoring organization.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
