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U.S. Consumer Spending Rises on Higher Prices
Published in Saudi Press Agency on 02 - 05 - 2008

U.S. consumers spent more in March, but much of the gain was due to soaring prices for energy, food, and services, the government reported Thursday.
The Commerce Department said consumer spending rose 0.4 percent—double the increase that economists had predicted. However, after inflation was removed, spending rose only 0.1 percent.
March's figures represent he fourth consecutive month of weak performance, as consumers have been hit by record-high gasoline prices, a severe housing slump, and rising job layoffs.
On the inflation front, a price gauge tied to consumer spending rose by 0.3 percent in March, triple the 0.1 percent rise in February. Much of the jump reflected higher energy and food costs. “Core” inflation, which excludes energy and food prices, rose by 0.2 percent in March and is up 2.1 percent over the past 12 months, higher than the Federal Reserve's (Fed's) 1 percent to 2 percent comfort zone.
Personal incomes rose 0.3 percent in March, slightly slower than the 0.5 percent rise the previous month. The personal savings rate—savings as a percentage of after-tax income—fell to 0.2 percent in March from 0.4 percent in February.
Consumer spending is being closely watched due to concerns that too big of a slowdown will push the economy into a recession. Two-thirds of U.S. economic activity is fueled by consumers.
The government reported Wednesday that the overall economy grew slightly in the first quarter of the year as consumer spending slowed to the weakest pace since the second quarter of 2001, when the country was in its last recession.


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