Consumer Spending Takes an Unexpected Hit

Americans are making more but spending less, according to an April Personal Income and Outlays report (link opens as PDF) released today by the Commerce Department. While spending was a lonely bright spot in yesterday's downwardly revised Q1 2014 GDP estimate, April seem to have stymied consumers' confidence.

First, income: After increasing a revised 0.5% for March, personal income bumped up an additional 0.3%, not quite up to analyst estimates of a 0.4% gain. Services carried the income boost, adding $16.9 billion onto its payroll for April. Goods-producing industries dropped their payroll by $100 million overall; manufacturing experienced a $1.2 billion decline.

For the same period, personal spending edged down 0.1%, a far cry from analyst expectations for a 0.2% rise. In a potential sign of longer-term economic pessimism, durable goods spending dropped off 0.5%, although a strong 3.7% jump in March made major improvements unlikely.


While increases in personal income are generally signs of an improving economy, April's drop in expenditures reflects the fact that consumers aren't quite ready to believe in the recovery. Coming out of an especially cold winter, May should be a better indicator of whether individual Americans are poised to spend their hard-earned salaries.

Discover a top stock pick for 2014
Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

The article Consumer Spending Takes an Unexpected Hit originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Income Investing

Grow your nest-egg.

View Course »

Add a Comment

*0 / 3000 Character Maximum