Americans are making more but spending less, according to an April Personal Income and Outlays report (link opens as PDF) released today by the Commerce Department. While spending was a lonely bright spot in yesterday's downwardly revised Q1 2014 GDP estimate, April seem to have stymied consumers' confidence.
First, income: After increasing a revised 0.5% for March, personal income bumped up an additional 0.3%, not quite up to analyst estimates of a 0.4% gain. Services carried the income boost, adding $16.9 billion onto its payroll for April. Goods-producing industries dropped their payroll by $100 million overall; manufacturing experienced a $1.2 billion decline.
For the same period, personal spending edged down 0.1%, a far cry from analyst expectations for a 0.2% rise. In a potential sign of longer-term economic pessimism, durable goods spending dropped off 0.5%, although a strong 3.7% jump in March made major improvements unlikely.
While increases in personal income are generally signs of an improving economy, April's drop in expenditures reflects the fact that consumers aren't quite ready to believe in the recovery. Coming out of an especially cold winter, May should be a better indicator of whether individual Americans are poised to spend their hard-earned salaries.