Consumer spending in the U.S. unexpectedly declined in April as incomes stagnated, putting the biggest part of the U.S. economy on shaky ground at the start of the second quarter.
Household purchases, which account for about 70 percent of the economy, dropped 0.2 percent, after a 0.1 percent rise the prior month that was smaller than previously estimated, a Commerce Department report showed today in Washington. The median estimate in a Bloomberg survey of 79 economists called for no change. Incomes (PITLCHNG) were unchanged and prices dropped by the most in more than four years.
The data underscore the risk to the economy from the federal budget cuts that began in March and a higher payroll tax since the start of 2013. At the same time, the housing rebound, stock market gains and cheaper fuel costs are helping underpin household finances and confidence, which will help prevent an extended pullback.
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