Data signal soft economy but not abrupt slowdown
WASHINGTON — Consumer spending fell in April for the first time in almost a year and already-low inflation declined further, undercutting arguments for a near-term tapering of the Federal Reserve's bond-buying stimulus.
Despite the pullback in consumer spending, the economy is not slowing abruptly. Consumer sentiment approached a six-year high in May and factory activity in the Midwest regained speed this month, other data showed on Friday.
Although this suggests the economy may be squeezing out of a soft patch hit early in the second quarter, the limited show of strength is unlikely to convince the Federal Reserve to start scaling back the $85 billion in bonds it is buying each month.
“Any enthusiasm to slow the pace of bond purchases before the end of the summer will likely be tempered at the margin, particularly given the benign inflationary backdrop,” said Millan Mulraine, a senior economist at TD Securities in New York.
Consumer spending fell 0.2 percent, the weakest reading since May last year, the Commerce Department said. When adjusted for inflation, spending nudged up 0.1 percent.
The sixth straight month of gains in the so-called real consumer spending reflected a 0.3 percent decline in a price index for consumer outlays. It was the second straight monthly decline in the index and the largest drop since July last year.
Over the past 12 months, inflation has slowed to just 0.7 percent, the smallest gain since October 2009 and well below the Fed's 2 percent target. The price index had increased 1 percent in the period through March.
A core price index, which strips out food and energy costs, was up 1.1 percent in the past 12 months, compared with a 1.2 percent rise in March.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- S&P races to August milestone
- Young adults drive home rental trend in Western Pennsylvania
- Government approves compromise on Corbett’s alternative Medicaid plan
- UPMC to help China build private medical center to boost public care there
- EDMC reaches debt-restructuring deal with creditors
- Twitch.tv online network reveals value of video gaming market
- Customers anxious for details about Highmark transition plan for W. Pa.
- Economy grew at brisk 4.2% rate in Q2
- Abercrombie name to shrink from clothing
- 2 top technology officers leave UPMC