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Washington - U.S. consumers cut back on spending in April for the first time in a year, taking an unexpected pause after a big jump during the previous month. The results, however, are unlikely to derail an expected spring rebound in the economy.
Consumer spending, which accounts for 70 percent of overall economic activity, fell 0.1 percent in April, the Commerce Department said Friday. The drop was the first in 12 months. But it followed a 1 percent surge in spending in March, which marked the biggest increase in more than four years.
The latest figure reflects reductions in durable goods purchases such as autos and in services such as heating bills.
Income rose 0.3 percent in April after a 0.5 percent March gain.
With spending down while Americans were earning more, the saving rate increased in April to 4 percent of after-tax income, up from a saving rate of 3.6 percent in March.
Inflation, as measured by a gauge tied to spending, showed prices rising 1.6 percent from a year ago, up from a 1.1 percent year-over-year price gain in March. However, even with the increase, inflation is still below the Federal Reserve's 2 percent target.
In April, consumers reduced spending on durable goods such as autos by 0.5 percent, but this drop followed a big 3.6 percent jump in durable good spending in March. Consumers boosted spending on nondurable goods a slight 0.1 percent while trimming spending on services by 0.1 percent. Spending on services, which includes utility bills, had been rising rapidly during the winter, reflecting higher heating costs due to the severe cold in many parts of the country.
The rise in income was the fourth consecutive gain. The economy has been generating jobs at a solid pace in recent months including a gain of 288,000 jobs in April, the strongest uptick in hiring in two years.
Through the first quarter, consumer spending remained strong, rising at an annual rate of 3.1 percent, but much of that strength came from increased health care spending reflecting the fact that implementation of the Affordable Care Act opened up new access.