Washington, June 1 (IANS/EFE) Consumer spending, which makes up more than two-thirds of US gross domestic product, fell unexpectedly by 0.2 percent in April, the Commerce Department said Friday.
The US economy has begun to feel the combined effects of automatic federal budget cuts that began March 1 and the Jan 1 expiration of a payroll tax cut.
The drop in household purchases in April was the first since May 2012. Most economists had forecast that the reading would be roughly unchanged.
With salaries also virtually stable in April, the savings rate held steady at 2.5 percent.
Meanwhile, the price index tied to spending, the inflation measure most closely tracked by the Federal Reserve, fell by 0.3 percent in April – the largest decline since December 2008 – due mainly to a drop in fuel costs.