WASHINGTON — U.S. consumer spending fell by $8.1 billion, or 0.1%, in April 2014. It was the first monthly decline in consumer spending since April 2013 and followed a 1% increase of $117.6 billion the previous month.
“Despite hopes of pent-up demand driving consumption and overall growth through the second quarter — and the second half — it appears after just two months any lingering demand for goods left over from the winter months at the start of the year has since been satisfied,” said Sterne Agee chief economist Lindsey Piegza. “Going forward, in order to maintain momentum in spending, there must be sustainable job and income growth. Meaning it will take more than a hefty increase in the jobs number, but an increase in the quality of jobs is needed as well to create wage pressures, which at the moment remain virtually nonexistent.”
Prices are climbing as spending drops. Consumer prices rose 0.2% month-over-month and 1.6% year-over-year in April, the largest year-over-year increase since November 2012 and second consecutive month-over-month gain on 0.2%. Price increases remain below a 2% target set by the Federal Reserve.
Personal income also is on the rise, growing 0.3% in April. Higher incomes and lower spending pushed the personal saving rate to 4% in April from 3.6% in March.