Commerce Department: Consumer Spending Price Index Weakest Since 2009

The Commerce Department reported Monday that U.S. consumer spending was unexpectedly flat in April as households cut back and continued to save. The report, as with data released last week, indicates the economy was struggling in the second quarter after shrinking in first quarter.

The Commerce Department also claimed there were no inflation pressures, with a price index for consumer spending recording its smallest gain since late 2009 on an annual basis.

Economists polled by Reuters had forecast consumer spending, which represents more than two-thirds of all U.S. economic activity (GDP), gaining 0.2 percent in April. March’s numbers were initially reported to have increased by 0.4 percent.

When adjusted for inflation, however, consumer spending was unchanged in April after allegedly rising by 0.4 percent in March. Gross domestic product (GDP) contracted at a 0.7 percent annual rate in the first quarter after the government initially estimated a pathetic 0.2 percent gain.

Anemic consumer spending data in addition to weak industrial production are suggesting growth in the second quarter is also deficient, despite upbeat reports on the labor market, business spending plans and housing.

Excluding food and energy, prices ticked up 0.1 percent for a third straight month. The so-called core PCE price index increased 1.2 percent in the 12 months through April.