The savings rate for U.S. households slipped in April as spending grew faster than incomes, the Commerce Department estimated Friday.
The savings rate for U.S. households slipped in April as spending grew faster than incomes, the Commerce Department estimated Friday. The personal savings rate declined to 3.4% in April from 3.5% in March. The April level matches the February level, which prior to that month was the lowest savings rate since December 2007. Consumers had built up savings during the recession. Economists noted that the savings rate hit a high of 5.6% as recently as the third quarter of 2010. Real (inflation-adjusted) spending increased a seasonally adjusted 0.3% in April after a downwardly revised flat reading in March. Real after-tax incomes rose 0.2% in April, compared with a 0.2% gain in disposable incomes in March. In nominal terms, income rose 0.2% and spending rose 0.3%. Wall Street economists had expected 0.3% gains in both income and spending. The personal consumption expenditure price index, a key measure of inflation, was flat in April compared with March and is up 1.8% in the past year. This is down from a 2.1% rate in March. The annual rate in April is below the Federal Reserve's 2% inflation target. The core PCE rate rose 0.1% in April, down from the 0.2% gain forecast. Core prices are up 1.9% year-on-year, down from 2% in March.