Consumer Spending Still Propping Up U.S. Economy
May 4, 2004
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American consumers spent modestly in March, helping the U.S. economy log solid growth in the last quarter.
The U.S. Commerce Department reported that consumers boosted their spending by 0.4 percent in March, following another 0.4-percent increase in February, according to revised figures. February's increase was double the 0.2-percent advance reported earlier.
Americans' incomes, meanwhile, also rose solidly in March, increasing by 0.4 percent. That came on top of a 0.5-percent gain in February.
The increase was encouraging because income growth is a main factor in people's willingness to spend in the future, economists said.
"With the March rise in personal income, there is a solid base of ready cash to fuel spending increases," said Ken Mayland, president of ClearView Economics.
The income and spending figures are not adjusted for price changes.
Spending by consumers accounts for roughly two-thirds of all economic activity in the U.S. Their behavior plays a major role in determining the strength of the economy's recovery.
The rise in consumer spending in March wasn't as large as the 0.7-percent increase economists were forecasting.
Last month's income growth, however, matched analysts' expectations.
The economy grew at a solid 4.2-percent annual rate in the January-March quarter, a slight improvement from the 4.1-percent growth rate in the previous quarter, the government reported.
Consumer spending from January through March grew at a respectable annual rate of 3.8 percent, following a 3.2 percent pace in the fourth quarter.
In March, consumer spending on big-ticket durable goods, such as cars and appliances, rose 0.4 percent, following a 0.7 percent increase in February.
Spending on food, clothes, and other non-durable goods advanced 0.8 percent in March, double the 0.4 percent rise registered in the previous month. Spending on services went up 0.2 percent, after a 0.4 percent gain. Tax refunds, an improved job climate and super-low interest rates helped to support consumer spending last month, economists said. (AP)
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