WASHINGTON — Here’s a recipe that does not a strong recovery make: wages are stagnant, Americans are spending more of their hard-earning money on basics like food and fuel and housing can’t seem to rev up.
Consumers spent more in April, the Commerce Department said on Friday, but after discounting for higher food and fuel prices, spending barely budged and after-tax incomes were flat for a second straight month.
Meanwhile, pending sales of homes tumbled far more than expected in April to a seven-month low. The National Association of Realtors Pending Home Sales Index dropped 11.6 percent to 81.9 in April, the lowest since September. Pending home sales lead existing home sales by a month or two. Economists polled by Reuters had expected pending home sales to fall 1.0 percent.
Consumer spending rose 0.4 percent, reflecting a surge in the category that covers food and gasoline, areas which showed big price gains last month. Excluding price changes, spending rose a much smaller 0.1 percent. Incomes rose 0.4 percent but after-tax incomes adjusted for inflation were flat for a second straight month.
Analysts are worried that weak income growth and big gains in gasoline and food prices are leaving consumers with little left to spend […]