U.S. consumer spending rose more slowly in March, suggesting some consumer concerns about the economy, while household income rose weakly, the government reported Monday. The Commerce Department said consumer spending increased only 0.3 percent last month after a 0.9 percent gain in February. Personal income grew 0.4 percent-the biggest rise in three months-following a 0.3 percent gain in February. But after-tax income when adjusted for inflation increased only 0.2 percent in March, with the small gain following two months of declines. With spending rising more slowly than income, the savings rate rose slightly to 3.8 percent, the report said. Consumer spending accounts for 70 percent of U.S. economic activity. It rose 2.9 percent in the January-March quarter, the fastest pace in more than a year. But Monday's report indicates consumers may be reducing spending because of weak income gains and a slowdown in hiring. The government reported Friday that U.S. gross domestic product (GDP) -the total value of goods and services- grew at an annual rate of 2.2 percent in the first quarter, a significant slowdown from the 3 percent growth rate in the fourth quarter of 2011. Many economists believe consumers cannot maintain spending as they did in the first three months of this year without bigger pay increases. After-tax income rose only 0.6 percent in the first quarter compared with a year earlier, the smallest pay increase in two years. Also in Monday's report, a price index for personal spending rose 0.2 percent in March. In the 12 months through March, the PCE index was up 2.1 percent, the lowest in a year but still above the U.S. Federal Reserve's (Fed's) target of 2 percent. Another measure of prices suggested an increase of inflationary pressure, however. The core PCE, which excludes volatile energy and food prices and often is considered a measure of inflation trends, rose 2.0 percent in March from a year earlier, the biggest 12-month rise since late 2008.
