Personal Spending Slows With Rise Of Gas Prices
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Personal spending in America rose less than forecast in March, a sign higher gasoline prices and a sagging housing market are chipping away at a mainstay of the economic expansion.
Americans purchased 0.3% more than in the prior month, less than half the 0.7% increase in their incomes, the Commerce Department said yesterday in Washington. The Federal Reserve’s preferred measure of inflation was unchanged, while the National Association of Purchasing Management-Chicago said its business activity index declined in April.
Bonds rallied as traders bet that the slowdown in spending will further weaken an economy that last quarter grew by the least in four years. Some investors speculated that the monthly inflation figures may lead Fed Chairman Ben Bernanke to cut interest rates by September.
“It looks like consumer spending is going to be considerably weaker in the second quarter,” an economist at Deutsche Bank Securities Inc. in New York, Carl Riccadonna, said.
