US personal incomes barely grew in March, while personal spending rose less than forecast, a sign the economy continued to cool at the end of the first quarter.
Personal income including wages and salaries, interest, dividends, rent and transfer payments were unchanged in March following a 0.4 percent increase in February, the Commerce Department reported on Thursday. Economists forecast personal incomes to rise 0.3 percent.
Private wages and salaries rose $15.6 billion in March following a gain of $22.6 billion in February.
The personal savings rate, which reflects personal saving as a percentage of disposable personal income, was 5.3 percent in March compared with 5.7 percent in February.
Personal spending, which accounts for all the goods and services purchased by US households and nonprofit institutions, increased 0.4 percent in March after rising 0.1 percent in February. Economists forecast personal spending to increase 0.5 percent.
Meanwhile, core personal consumption expenditure (PCE) – the Federal Reserve’s preferred guidepost of inflation – rose 1.3 percent annually, official data showed.
Household consumption waned in the first quarter, stemming partly from severe winter weather and plunging oil prices. Consumer spending, which accounts for about 70 percent of the US economy, increased only 1.9 percent in the first quarter following an increase of 4.4 percent in the final three months of 2014, the Commerce Department reported on Wednesday.
Weak consumer spending culminated a disappointing first quarter that saw gross domestic product expand just 0.2 percent annually, well below modest forecasts calling for a gain of 1 percent.
Analysts use personal spending as a proxy for consumer confidence in the economy. Consumer confidence weakened unexpectedly in April, as concerns about the labour market and the short-term outlook weighed on sentiment. The Conference Board’s consumer confidence index fell to 95.2 in April from 101.4 in March, the private research firm reported earlier this week.