Economy Watch: Consumer Spending Sees Meager Monthly Rise
- May 16, 2012
U.S. consumers spent a little more in April than in March, but not much more, with the Census Bureau reporting a 0.1 percent month-over-month increase on Tuesday, adjusted for seasonal factors. Compared with April 2011, however, there was a 6.4 percent increase in consumer spending.
Factor out gasoline, whose price has been falling in recent weeks, and retail sales were up 0.2 percent month-over-month in April, and also up 6.4 percent year-over-year. Take cars out of the consumer spending equation and the monthly increase in spending was exactly the same as the overall rate, 0.1 percent.
Department stores, clothing stores and office supply stores all saw their sales edge down, though furniture and sporting goods retailers did better during April than March. One reason for the weak rise in spending after the relatively robust first quarter might be the weather. The theory is that unusually warm winter in most parts of the country might have brought sales forward that otherwise would have waited until the spring.
Separately, the Bureau of Labor Statistics said on Tuesday that the Consumer Price Index didn’t budge in April. Gasoline prices are moving down—prices at the pump dropped 2.6 percent during the month—but a lot of other consumer goods are eking out small increases, so on the whole things balanced out for the month.
Take out energy and food, and the “core” index for consumer prices was up 0.2 percent for the month. Consumers saw increases in shelter—that’s the tight apartment market at work—used cars and trucks, medical care, airline fares, new vehicles and apparel. Prices for all kinds of energy were down, not just gas, including heating oil and natural gas.
Compared with the same month last year, prices for all items were up 2.3 percent in April, the lowest annual change since February 2011. The index for all items less food and energy also increased 2.3 percent over the last 12 months, which was the first time since Oct. 2009 that the all-index hasn’t been more than the “core” index (without energy and food).
Homebuilders feeling better
Homebuilder confidence has reached its highest level since before the housing crash, according to the National Association of Home Builders on Tuesday, reporting that its housing market index (HMI) has increased five points to 29. Each of the index’s components rebounded from declines in the previous month, with current sales conditions and traffic of prospective buyers both rising five points to 30 and 23, respectively. The component gauging sales expectations in the next six months rose three points to 34.
These are only relatively high numbers, however, since 50-plus still represents an optimistic industry. “While home building still has quite a way to go toward a fully healthy market, the fact that the HMI has returned to trend is a sign that firming home values, improving employment and low mortgage rates are drawing consumers back,” NAHB chief economist David Crowe noted in a press statement.
Wall Street had another down day on Tuesday, probably still jittery with euro-worries, with the Dow Jones Industrial Average dropping 63.35 points, or 0.5 percent. The S&P 500 lost 0.57 percent and the Nasdaq declined 0.3 percent.