Incomes rose at a faster pace in March, but consumer spending slowed, according to US Commerce Department figures released today, CNN Money reported.
Income rose 0.4 percent – up from 0.2 percent the month before, and the most in three months, Bloomberg News reported. Consumers only spent 0.3 percent more, less than the 0.9 percent spending increase in February.
According to CNN Money:
It was the first time since December that income growth outpaced spending increases, as consumers dipped into savings the previous two months in order to deal with rising prices, such as increases in gasoline prices.
“The spending number is an indication that the higher gas prices we saw last month are taking their toll,” Todd Schoenberger, managing principal at the Black Bay Group in New York, told the New York Times.
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Consumers put away some of their extra money, and the savings rate increased, from 3.7 percent to 3.8 percent, the New York Times reported.
Retailers that did attract shoppers included Target, the second-largest US discount chain, and Gap Inc., the largest US clothing retailer, whose same-store sales were higher in March than analysts had predicted, Bloomberg News reported. Cars sales also increased, according to Bloomberg News.
“This report sets up fairly well for the second quarter,” Peter Newland, a US economist at Barclays Capital Inc. in New York told Bloomberg News. “What was encouraging was that the income numbers improved. Our expectation is that job growth does increase gradually” this quarter, he added.
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