Consumers cautious despite lower gas prices

Consumers cautious despite lower gas prices

HomeOthersBusiness Mon Jun 1, 2015 3:24PM

US consumer spending has been flat in April, yet another evidence that the country’s economic recovery is struggling to get back on track.

According to a report by the Commerce Department, consumer spending in April posted the weakest performance in a quarter.

The report indicated that spending on goods fell 0.5% in April while spending on service increased by 0.2%.

This indicates that American households remain cautious about spending despite solid job creation and lower gasoline prices.

“Even though their incomes are rising at a healthy pace, households are still reluctant to boost spending more freely,” Paul Ashworth, chief U.S. economist at Capital Economics was quoted as saying by the US media.

Meanwhile, personal income increased 0.4%, showing a jump in wages and salaries. Weak consumption also dragged inflation further below the Fed’s 2% target.

Consumer spending is a key driver of economic growth as it accounts for 70% of economic activity.

Some economic analysts believe that US consumer confidence has already softened.

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