By Jason Lange
WASHINGTON, April 30 U.S. household income rose
in March by the most in three months but consumers socked away
part of the extra cash and only modestly increased spending,
suggesting economic growth ended the first quarter on a soft
The Commerce Department said on Monday consumer income rose
0.4 percent last month. Analysts had expected a gain of 0.3
percent. After-tax income climbed 0.2 percent in March when
accounting for higher prices.
Consumer spending rose 0.3 percent last month, also just
below the median forecast in a Reuters poll of 0.4 percent.
When taking into account inflation, which has been fed in
recent months by higher gasoline prices, spending was up 0.1
"The spending number is an indication that the higher gas
prices we saw last month are taking their toll," said Todd
Schoenberger, managing principal at the Black Bay Group in New
U.S. economic growth cooled in the first quarter as
businesses cut back on investment and restocked shelves at a
slower pace. The economy grew at an annualized pace of 2.2
percent in the first three months of the year, data on Friday
showed, a slowdown from the fourth quarter's 3.0 percent rate.
Stronger consumer spending over the entire quarter cushioned
the blow, but Monday's data suggested consumers ended the
quarter spending less freely.
With consumption rising less quickly than income, the saving
rate edged higher to 3.8 percent.
Prices for U.S. government debt held steady at higher
levels, while U.S. stock index futures were slightly lower.
A price index for personal spending rose 0.2 percent in
March. In the 12 months through March, the PCE index was up 2.1
percent, the lowest in a year but still just above the U.S.
Federal Reserve's target of 2 percent.
Another measure of prices suggested some build-up of
inflationary pressure, however. The core PCE index, which strips
out volatile food and energy prices and is often read as a
measure of inflation trends, rose 2.0 percent in March from a
year earlier, the biggest year-on-year rise since November 2008.