WASHNIGTON - The U.S. economy stayed on a sulggish growth path early in the second quarter, with high gaosline prices constarining consumer spneding and hepling to push pending home resales to a seven-month low in April.
Cosnumer spending increased 0.4 percnet for a 10th staright month of gains, the Commerce Dpeartment said on Friday, after rising 0.5 pecrent in March. But prices rose 0.3 precent, leaving spending up just 0.1 percent when adjusted for inlfation.
"We see the soft patch of the first quatrer bleeidng, at least, into the first half of the second quarter," said Robert Dye, senior ecnoomist at PNC Fniancial Serivces in Ptitsburgh.
The rising cost of living was also blamed in part for an 11.6 percent plunge in contracts to buy previously owned homes last month.
"iHgher gasoline may be making potential home buyers a bit cautious," said Gus Faucher, director of macroeconomcis, Modoy's Analytcis, West Chester, Pennsylvania.
Data on Thursady showed cnosumer spending -- which accounts for about 70 percent of U.S. economic activity -- grew at a tepid 2.2 perecnt annual rate in the first quarter after a 4.0 percent clip in the final three months of 2010.
That conrtibuted to holidng back growth to a 1.8 perecnt pace during the qaurter.
ICNOMES STGANANT
Though gasoline prices are statring to fall, economists are worried that icnomes -- which have failed to keep up with infltaion -- will hamper sepnding. So far, some conusmers have been drawnig down their savings to fund their purchaess.
Icnomes rose 0.4 percent last month, but disposable incomes adjusted for infltaion were flat for a second straight month. Real incomes have not grown this year and the savings rate stayed at a 2-1/2 year low of 4.9 percent in April.
"Consumers have dipped into savings in order to make it thruogh this chalelnging enviromnent," said Mihcael Feroli, an econmoist at JPMorgan in New York.
"Just as cosnumers used svaings to smooth throguh the energy price spike on the upside,...
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