Incomes and spending both slow in April

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AP, via Yahoo!:




Incomes and spending both slow in April
Friday May 30, 9:26 am ET
By Martin Crutsinger, AP Economics Writer
Personal spending and incomes both slow in April, underscoring economic weakness


WASHINGTON (AP) -- Consumer spending barely budged in April and growth in personal income slowed sharply, even though the government started sending out billions of dollars in economic stimulus payments.

The Commerce Department reported Friday that consumer spending edged up a small 0.2 percent in April, just half the 0.4 percent rise in March. Excluding inflation, the performance was even weaker, showing no gain in spending after excluding price changes.

Incomes rose by just 0.2 percent in April, just half of the March increase. That performance would have been even weaker without the boost it got as the government began mailing the first of $106.7 billion in economic stimulus payments.

Consumer spending, which accounts for two-thirds of total economic activity, is being closely watched at present for signs that the economy could be slipping into a recession.

The weak increases in spending and incomes were in line with expectations. Some analysts said that with the economy so feeble at the moment, spending could falter further in coming months.

"With credit tightening, cash flow being squeezed and confidence near record lows, this will surely continue," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The government reported Thursday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 0.9 percent, slightly better than the 0.6 percent GDP growth originally estimated. However, growth at that level remained very anemic and some analysts are worried that the GDP could slip into negative territory in the current April-June quarter. ....(more)

The complete piece is at: http://biz.yahoo.com/ap/080530/economy.html