Consumer spending fell in April after the biggest surge in almost five years as incomes slowed, a sign the largest part of the U.S. economy will take time to accelerate.
Household purchases, which account for about 70% of the economy, dropped 0.1%, the first decrease in a year, after a revised 1% gain the prior month that was the strongest reading since August 2009, the Commerce Department reported.
The median forecast of 77 economists in a Bloomberg News survey called for a 0.2% rise. Incomes advanced 0.3% after climbing 0.5%.
“The March gain in spending was huge, and April brings us back to something more reasonable,” said Stephen Stanley, chief economist at Pierpont Securities. “We need to see an acceleration in labor income, and we really haven’t had that yet. Consumer spending is likely to be steady but nothing spectacular.”
Spending on durable goods, including automobiles, decreased 0.5% adjusted for inflation, following a 3.7% surge. Purchases of nondurable goods, which include gasoline, fell 0.3%.