The Bureau of Economic Analysis observed that personal spending rose 0.3 percent in March, its slowest pace so far in 2012. Personal consumption expenditures had increased 0.5 percent and 0.9 percent in January and February.
In constant 2005 dollars, consumers spent just 0.1 percent more for the month. Much of the growth was attributable to higher nondurable goods purchases, with durable goods spending lower. Even with this month’s slowdown, consumer spending is 4 percent higher today than last year.
While spending lagged somewhat in March, personal income continued to grow moderately, up 0.4 percent. This was above the 0.3 percent growth rate of February. Disposable income also grew by that rate, with real personal disposable income up 0.2 percent. Manufacturing wages increased from $730.5 billion to $730.6 billion, a small jump for the month but a continuation of a larger upward trend over the past couple years.
With income growth outpacing spending, the savings rate increased from 3.7 percent to 3.8 percent. Still, it remains low, especially since the savings rate stood at 4.7 percent in December.
Inflation continues to be modest. Prices for consumer items are rising by 2.1 percent at the annual rate, with core inflation, which omits food and energy, up 2 percent. Energy goods and services have moderated since the past report, as they are up 1 percent in March versus being 3.5 percent higher in February. This is obviously welcome relief.
Chad Moutray is chief economist, National Association of Manufacturers