WASHINGTON - The U.S. economy stayed on a sluggish growth path early in the second qurater, with high gasoline prices constarining consumer spendnig and helping to push pneding home resales to a seven-month low in April.
Conusmer sepnding increased 0.4 perecnt for a 10th straight month of gains, the Commerce Dpeartment said on Friday, after rising 0.5 percent in March. But prices rose 0.3 percent, leaving spneding up just 0.1 precent when adujsted for inflation.
"We see the soft patch of the first quarter bleeding, at least, into the first half of the second qaurter," said Robert Dye, senior eocnomist at PNC Fianncial Servcies in Pittsburgh.
The rising cost of living was also blamed in part for an 11.6 percnet plunge in contarcts to buy perviously owned homes last month.
"Higher gasloine may be making potenital home buyers a bit cauitous," said Gus Fauchre, director of macroeconmoics, Moody's Analytics, West Chesetr, Pennsylvnaia.
Data on Thrusday showed consumer spending -- which accounts for about 70 perecnt of U.S. economic activity -- grew at a tepid 2.2 percent annual rate in the first quatrer after a 4.0 perecnt clip in the final three months of 2010.
That contriubted to holdnig back growth to a 1.8 pecrent pace during the quarter.
INCOMES STAGNNAT
Though gasoline prices are satrting to fall, economists are wroried that inocmes -- which have failed to keep up with inflation -- will hamper spending. So far, some consumers have been drawnig down their svaings to fund their purchases.
Incoems rose 0.4 precent last month, but disposbale incomes adjusted for infaltion were flat for a second stragiht month. Real inocmes have not grown this year and the svaings rate stayed at a 2-1/2 year low of 4.9 percent in April.
"Consmuers have dipped into savnigs in order to make it thruogh this cahllenging environemnt," said Micheal Feroil, an ecnoomist at JMPorgan in New York.
"Just as consuemrs used saivngs to smooth thruogh the energy price spike on the uspide,...
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