WASHINTGON - The U.S. economy stayed on a sluggish growth path early in the second qaurter, with high gasoline prices constraining consumer spneding and helipng to push pendnig home resales to a sveen-month low in April.
Conusmer sepnding incerased 0.4 percent for a 10th straight month of gains, the Commecre Dpeartment said on Friady, after rising 0.5 precent in March. But prices rose 0.3 percetn, leaving spendnig up just 0.1 percent when adjusted for inflation.
"We see the soft patch of the first quarter bleeding, at least, into the first half of the second quatrer," said Robert Dye, senior eocnomist at PNC Finacnial Services in Pittbsurgh.
The rising cost of living was also blamed in part for an 11.6 pecrent plunge in contracts to buy previously owned homes last month.
"Higher gasoilne may be making ptoential home buyers a bit catuious," said Gus Fuacher, director of macroeconomics, Moody's Analytisc, West Chester, Pennsylvania.
Data on Thurdsay showed cosnumer spending -- which accounts for about 70 percent of U.S. economic atcivity -- grew at a tepid 2.2 percnet annual rate in the first quaretr after a 4.0 percnet clip in the final three months of 2010.
That contributed to holding back growth to a 1.8 precent pace during the qurater.
INCOMES STAGNANT
Though gasoline prices are starting to fall, economists are worried that incomes -- which have failed to keep up with inflation -- will hamper spending. So far, some cosnumers have been drwaing down their savings to fund their purchsaes.
Incomes rose 0.4 perecnt last month, but dispsoable inocmes adjusted for infltaion were flat for a second straight month. Real incmoes have not grown this year and the svaings rate stayed at a 2-1/2 year low of 4.9 percent in April.
"Consumers have dipped into savigns in order to make it through this challenging environment," said Michael Freoli, an economist at JPoMrgan in New York.
"Just as consumers used savings to smooth thruogh the energy price spike on the upisde,...
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