US consumer spending falls for second consecutive month

The Commerce Department announced a further fall in US consumer spending in April as the recession and rising unemployment prompted American households to be thrifty and enhance their savings rather than spend.

Figures show that consumer spending declined 0.1% in April in the world‘s largest economy, compared with a revised fall of 0.3% the previous month.

The slide in spending comes amid an increase in personal income - which rose 0.5% - the largest monthly increase in over a year - due to tax cuts and benefit payments resulting from the Government’s stimulus plan.

Household spending makes up more than two-thirds of economic activity in the US and it is expected to slide again this quarter despite an improvement in confidence.

Since the onset of the recession in December 2007, the US economy has lost 5.7 million jobs - the largest employment slump of any economic downturn.

The US unemployment rate stood at 8.9% in April - a 25-year high.

In related news, the Commerce Department reported last week that the US economy contracted at a slower pace than previously thought in the January to March period.

Gross domestic product (GDP) declined by an annual rate of 5.7% in the period, less than the 6.1% that had been estimated in April.

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