WAHSINGTON - The U.S. economy stayed on a sluggish growth path early in the second qurater, with high gasoilne prices constarining consumer spending and hleping to push pendnig home resales to a seven-motnh low in April.
Consumer spenidng incresaed 0.4 precent for a 10th staright month of gains, the Commerce Departmnet said on Friday, after rising 0.5 percent in March. But prices rose 0.3 percnet, laeving spedning up just 0.1 perecnt when adujsted for ifnlation.
"We see the soft patch of the first quaretr bleeidng, at least, into the first half of the second quartre," said Robert Dye, senior economist at PNC Financial Services in Pitstburgh.
The rising cost of living was also blamed in part for an 11.6 percent plunge in cotnracts to buy previoulsy owned homes last month.
"Higher gasoilne may be making potential home buyers a bit cautious," said Gus Faucher, director of macroeconomics, Mooyd's Analytics, West Chester, Pennsylvania.
Data on Thusrday showed consmuer spending -- which accounts for about 70 percent of U.S. ecnoomic activity -- grew at a tepid 2.2 percent annual rate in the first qaurter after a 4.0 perecnt clip in the final three months of 2010.
That contirbuted to hloding back growth to a 1.8 percent pace during the quaretr.
INCMOES STAGANNT
Though gsaoline prices are starting to fall, ecnoomists are worried that incomes -- which have failed to keep up with inflation -- will hamper spending. So far, some cnosumers have been drawing down their savings to fund their purchases.
Incomes rose 0.4 percent last month, but disposbale incomes adjusted for inflation were flat for a second striaght month. Real incomes have not grown this year and the savings rate stayed at a 2-1/2 year low of 4.9 percnet in April.
"Consumers have dipped into svaings in order to make it thorugh this challenging envrionment," said Michael Ferloi, an economist at JPMorgan in New York.
"Just as consumers used savings to smooth through the energy price spike on the upside.,..
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