Consumers in U.S. Still Cautious

Consumer spending in the U.S. was little changed during April, the most recent sign that caution remains in many households around the nation.

Personal spending, a measure of purchases of everything from haircuts to home appliances decreased by less than 0.1% compared to March, said the Commerce Department early Monday.

Spending was up by 0.5% in March compared to the initially reported amount of 0.4%.

Personal income, a measure of money that is received from different sources including wage as well as government assistance programs, was up 0.4% during April from the month before.

Economists surveyed by a leading newspaper expected the spending would increase by 0.2% and that income would go up by 0.3%.

Consumer spending represents over two thirds of the economic output in the U.S. and is a key component of growth. However, outlays of cash slowed during the severe winter and have not yet showed any signs of a sustained increase despite the weather getting better, solid creation of jobs and prices of gasoline that remain far below their levels from the same time one year ago.

Consumer confidence appears as if it has softened. The sentiment index for the end of May that came out last week was at a low of six months.

The report released on Monday showed that spending on services was up 0.2% for April compared to the month prior but that spending on goods dropped by 0.5%. When adjust to include inflation overall consumer spending was just flat during April.

Households in the U.S. appear to be more inclined to save instead of splurge over the past few months. The personal rate for saving was up during April to 5.6% from the prior months 5.2%.

While spending by consumers slowed markedly during the opening three months of 2015, many economists thought it would rebound especially after the effects of a severe winter and port disruptions started to wane

The report on Monday showed as well that inflation for the U.S. in April was under the 2% target by the Federal Reserve for the 36th straight month.

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