Inflation up, consumer spending anemic for April

Would someone be kind enough to let us know when to hit the panic button on the economy?


Consumer spending rose modestly in April, starting the second quarter on a soft note as high gasoline prices continued to squeeze household finances and keep inflation pressures simmering.

The Commerce Department said on Friday consumer spending increased 0.4 percent, rising for a 10th straight month, after a 0.5 percent gain in March. It also said annual inflation rose at its fastest pace in 12 months.

Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent last month.

When adjusted for inflation, spending nudged up 0.1 percent last month after gaining 0.1 percent in March.

"This shows that the trend going in the second quarter is weaker than what people had thought. This promotes caution about projecting faster growth in the second quarter," said Pierre Ellis, a senior global economist at Decision Economics in New York.

Consumer spending rose at a 2.2 percent annual rate in the first quarter, braking sharply from a 4 percent pace in the October-December period. That contributed to holding back growth to a 1.8 percent pace during the quarter.

But a recent cooling in gasoline prices should ease some of the pressure on households and boost spending in the months ahead.

With growth in the first quarter pegged at a minuscule 1.8%, about the best you can say about the Obama economy is that we're not in a double dip recession - yet. There are many analysts who expect that number to be revised downward and expectations for growth in the second quarter have already been cut. Housing us still a monumental drag on the economy and the employment situation is not getting much better.

The Democrats desperately want to change the subject to Medicare, which may work for a while but eventually, people will focus on the economy. With 55% believing we're still in a recession, that means trouble for the Dems.