Consumer Spending Creeps Higher in March

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Consumer spending rose at the slowest rate in five months in March while construction activity merely nudged up in response to weakness in housing.

At the same time incomes grew, demonstrating that consumers are holding on to purchasing power.

Dr. Carl Steidtmann, chief economist at Deloitte, attributes much of the weakness to tepid home sales.

"A lot of times whey you buy a house you end up painting a new room, buying new drapes, getting a new coffee table. But all of those purchases aren't taking place because home sales have been relatively weak," he said.

The Commerce Department reported Monday that consumer spending eked out a 0.3 percent gain to $24.4 billion last month — the slowest increase since a similar rise in October.

Incomes were up 0.7 percent to $79.9 billion, the fourth straight month of solid income growth.

Spending on building projects edged up 0.2 percent in March as strength in hotel and shopping center construction offset the 11th drop in housing activity over the past year.

Steidtmann said just how bleak the March spending results were can't be determined until April's results are released. The two months are usually combined to account for the shift in the Easter holiday from year to year and weather. Months that include Easter tend to have higher food and spring fashion sales. Weather is a factor too — it affects the strength of spring sales.

"This may be more of a statistical anomaly rather than a slower spending pace," Steidtmann said. "We won't know until next month."

The weaker-than-expected performance in consumer spending was certain to add to worries that the economy could be in danger of stalling out if consumer confidence falters in the face or rising gasoline prices and a slumping housing market.



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