adminlargest economy.
Consumer spending, the main driver of economic activity, dropped by 0,2 percent, following a 0,1 percent rise in March.
Personal income was down less than 0,1 percent, essentially flat, after a 0,3 percent gain in the prior month.
Disposable personal income, the amount of post-tax income left to spend, fell 0,1 percent after March’s 0,2 percent rise. The personal savings rate was unchanged from March at 2,5 percent.
Analysts said the first glimpse of consumer spending in the current quarter suggested growth remained too modest for the Federal Reserve to begin tapering its US$85 billion a month asset-purchase programme, aimed at tamping down longer-term interest rates.
“Personal income and spending came in weaker than expected. This fits with our call that the only factor boosting consumer spending is the interest rate subsidy being provided by the Fed and if you remove this subsidy the economy slows,” said Steven Ricchiuto, chief economist at Mizuho Securities USA.
In addition to the Fed’s open-ended quantitative easing programme, the central bank has kept its key interest rate between zero and 0,25 percent since December 2008 to support the recovery from the Great Depression.
The price index for personal consumption expenditures dropped 0,3 percent. — AFP.
Online Reporter