According to Department of Commerce, consumer spending dropped 0.2% this April.

Analysts before expected rise of about 0.1%, that was change seen during March. The consumer spending does account for around 70% of the economic activity of US.

The spending got held back due to utilities’ weaker demand as well as less money spent on the petrol, following decrease in fuel price. Increase in tax might have hit the spending also.

Increase in the payments of social security has reduced workers’ take-home pay. Someone earning $50,000 in a year gets to have $1000 less for spending in a year due to the increase of taxes of social security. A household that has 2 workers which are highly paid has about $4500 less.

As the petrol prices also declined greatly this April and March, the sum of money that consumers used to spend at the fuel stations did fall.

The figures have showed that the household income remained unchanged the previous month, after rise of 0.3% in March along with gain of 1.2% in February.

Also, US economy is being hit by the government’s acts of reducing spending, that took affect during March’s beginning.

The figures that were released this Thursday showed the economy of US grew with 2.4% rate during 1st three months in this year, lower by original estimate that was 2.5%.

Growth rate is expected that it will slow in current quarter, due to the result of the spending cuts by government and the global economy’s continuing weakness.

Though, there can be a bit of relief later this year.

The prices of houses rose by 11% during the previous 12 months, that could  spur the spending. Some of the economists challenge that for each one dollar rise of house prices’ value, the consumer spending could rise by maximum 10 cents.

The slow and steady improvement of employment figures of US, in addition, could provide support for consumer spending.  The figures that are due to be out in these days are expected to prove that in May there were 165,000 jobs created.

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