U.S. consumer spending slowed in March, income rose
Americans increased their spending more slowly in March, suggesting some are worried their paychecks aren't growing fast enough. The Commerce Department reports this morning that consumer spending increased just 0.3% last month after a 0.9% gain in February. Income grew 0.4% following a 0.3% gain in February. But after-tax income when adjusted for inflation increased just 0.2% in March. The gain followed two months of declines. Consumer spending accounts for 70% of economic growth. It rose 2.9% in the January-March quarter—the fastest pace in more than a year. But some people may be cutting back because of weak income gains and a sharp reduction in hiring last month. "Real incomes will need to grow at a faster rate to prevent consumption growth from slowing," says Paul Dales, senior U.S. economist at Capital Economics. Dales says Friday's report on April hiring is a crucial sign of where the economy is headed. The government reported Friday that the overall economy grew at an annual rate of 2.2% in the January-March quarter, down from the 3% annual growth seen in the October-December period.
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