Americans boosted spending in March, partly due to high heating bills, but slow income growth suggests consumers may have trouble propping up the economy in coming months.
Personal spending, which measures purchases from cars and clothes to health care and heating, rose 0.2% last month, the Commerce Department said Monday. Economists had forecast no change in spending levels.
Consumer outlays drive about two-thirds of economic activity in the U.S. Policy makers and economists have worried that higher taxes and government cutbacks would drive Americans to spend less and damp already slow growth. So far, consumers appear to be adjusting by cutting back on savings rather than spending.
Much of last month's spending increase was due to colder-than-normal weather. Outlays for services jumped 0.7%, partly reflecting payments to utilities. Spending on goods fell. There was a weakness of spending on goods in recent months.
Personal incomes, meanwhile, were up only 0.2% last month.
Figures out Friday showed that personal consumption rose 3.2% in the first three months of the year, though the savings rate fell to 2.6% from 4.7% in the fourth quarter. That has helped support the economy, which expanded at a 2.5% rate in the first quarter of the year. The U.S. has faced spring slowdowns each of the past three years and once again second-quarter activity isn't expected to match the pace of the first three months of the year.
One factor: consumers may not be willing to cut savings further. Savings as a percent of disposable income held steady at 2.7% in March.
Sheila McKinney
