Americans cut back on spending in April because their income did not grow, the government said Friday, signaling that economic growth may be slowing. The Commerce Department reported that consumer spending dropped 0.2 percent in April, the first decline since last May. That follows a 0.1 percent increase in March and a 0.8 percent jump in February. Adjusted for inflation, spending increased 0.1 percent last month. Income was unchanged in April, after a 0.3 percent rise in March and 1.2 percent gain in February. The retrenchment in spending suggests that consumers may be starting to feel the impact of higher taxes. Consumer spending drives 70 percent of economic activity. The fastest growth in spending in more than two years helped the economy expand at a 2.4 percent rate in the first quarter, much faster than the 0.4 percent rate from October through December. But many economists now say that growth is slowing to a pace of around 2 percent. Still, a decline in gas prices may have played a part in reducing spending in April because the figures are not adjusted for inflation. Gas prices dropped in March and April after peaking in late February. Improvement in hiring, rising home prices, and strong stock gains could make consumers more willing to spend later in the year. Home prices, meanwhile, have surged nearly 11 percent in the past year. Some economists estimate that for every dollar increase in home values, consumer spending can rise as much as 10 cents.
