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Income, spending both up
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May 29, 1998: 9:20 a.m. ET
April spending increases 0.5 percent; personal income rises 0.4 percent
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NEW YORK (CNNfn) - Americans made more money at the beginning of the second quarter but continued to increase their spending as well.
Incomes grew 0.4 percent in April to an annual rate of $7.184 trillion following a 0.3 percent gain in March, the Commerce Department reported Friday.
Meanwhile, personal spending on both goods and services increased 0.5 percent to a seasonally adjusted annual rate of $5.721 trillion, matching the rise in March.
Economists had expected income to rise 0.3 percent in April. Spending figures were in line with expectations.
Consumer spending accounts for about two-thirds of national economic activity, so steady gains in spending are vital to growth. But April's rise came at the expense of reduced savings in bank accounts and other savings vehicles. The savings rate hit its lowest level in nine months, the Commerce Department said.
Savings dipped to an annual rate of $213.1 billion from $219.4 billion in March. In other words, only 3.5 cents of every dollar earned went into savings last month compared with 3.6 cents in March. That's the lowest since the 3.3 cent savings rate recorded last July.
Spending on costly durable goods increased 0.7 percent during April to $687.4 billion a year, bouncing back from two straight months of declines in February and March. Analysts said beforehand that strong sales of new cars during April was expected to give durables spending a boost.
Spending on nondurable or quickly used products like food and gasoline was up 0.6 percent to a rate of $1.636 trillion following a slight 0.1 percent March gain, while spending on services moderated to a 0.4 percent gain at an annual rate of $3.398 trillion after a 1.1 percent jump in March. 
-- from staff and wire reports
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