Click here to subscribe today or Login.
Spending fell 0.2 percent in March, ending an otherwise strong quarter on a sour note.
A customer enters a Sears Hardware store that is advertising jobs in Bainbridge Township, Ohio, Tuesday. The number of newly laid-off workers posted an expected drop last week.
AP photo
WASHINGTON — Americans spent less than expected in March, pulling back after a burst of buying in the first two months of the year. The reversal was tied to a larger-than-anticipated decline in income and is a stark reminder of a fragile economy trying to rise out of a deep recession.
The Commerce Department data released Thursday highlighted one of the big wild cards for the economy: consumers’ appetite to spend in the months ahead.
How it ultimately plays out will depend on how rising unemployment, falling home values and hard-to-get credit can be blunted by fatter paychecks included in President Barack Obama’s $787 billion stimulus package, low mortgage rates and other borrowing costs.
Analysts think wary consumers will try to do a better job of balancing spending and saving for a rainy day.
Consumer spending fell 0.2 percent in March, ending an otherwise strong quarter for spending on a sour note. Americans’ incomes — the fuel for future spending — tumbled 0.3 percent for the month, reflecting wage cuts and layoffs as employers cut costs. Both the income and spending figures were weaker than economists had expected.
“Consumption fell in March, but let’s not panic a whole lot,” said Joel Naroff, president of Naroff Economic Advisors. “The modest drop off in spending does not change the fact that individuals are starting to buy more things and are attempting to live their lives a little more normally.”
Consumer spending grew at an annualized rate of 2.2 percent in the first quarter, the government said Wednesday in reporting on the nation’s gross domestic product. Thursday’s spending figure was included in the GDP estimate.