Consumer spending falls in April 2013

On May 31, 2013, a government report found that consumers pulled back on spending in the month of April 2013, as their income remained steady. The report mentions that spending decreased 0.2% in April 2013 when it was adjusted for inflation. According to economists, they expected a rise of 0.1%, so the result was disappointing.

Consumer spending accounts for more than two-thirds of the nation’s economy. One of the reasons for the pull back in spending is thought to be weak income data, which remained unchanged while adjusting for inflation. The disposable income fell by 0.1%.

Economists have feared that the cutback in consumer spending would be a drag on the economy in 2013. The cutback in spending is also known as the sequester, which includes employee furloughs. The report released might even be a warning sign of economic headwinds.

An earlier report by the government mentioned that the retail sales rose slightly in April 2013, as strong car sales helped to make up for weakness in other sectors. It was also clear that the report does not mention how consumers spend money, but just how much money they are spending, saving or paying in taxes.