The latest report shows flat consumer spending despite solid income growth and improvement in the labor market.
The Federal Reserve Bank of New York released its latest U.S. Economy in a Snapshot Thursday and presented an analysis of the purpose of the data series, launched in June 2015, for households and economists.
“Our goal is to provide information that helps households and businesses follow the data along with the Fed,” said Federal Reserve Bank of New York President and CEO William Dudley during a news conference Thursday. “If people know more about how the economy is performing and how that is likely to influence our actions, this should make it easier for us to achieve our twin objectives.”
The New York Fed is seeking to help consumers and businesses understand the U.S. economy and identify the key economic data releases and financial variables to focus on, according to a news release.
The U.S. Economy in a Snapshot released this month provides data on several trends including consumer spending, income and the labor market.
“Consumer spending was flat during the first quarter,” said Robert Rich, assistant vice president, research and statistics at the New York Fed during the news conference.
It was also flat in March, according to the recent U.S. Economy in a Snapshot. The lack of change in consumer spending is despite “relatively low gasoline prices, solid growth in real disposable income, and a labor market that has shown steady improvement,” according to the New York Fed.
“Real disposable income growth has been strong, this raises the question [of] what is behind the slowdown?” Rich said.
He noted that there is a change in consumers’ behavior when it comes to savings. The personal savings rate increased 5.4 percent in March, according to the U.S. Economy in a Snapshot. It was 5.2 percent in the first quarter, above the fourth quarter average of 5 percent.
Rich said consumers may be focusing on building up their precautionary savings and, with low interest rates, realizing they need to save more for retirement.
The consumer spending data shows real personal consumption expenditures in March increased less than 0.1 percent after a 0.3 percent increase in February.
This occurred while real disposable income increased 0.3 percent in March, considered a “robust pace,” by the New York Fed and at an annualized growth rate of 2.9 percent during the first quarter.
U.S. Economy in a Snapshot, released monthly, is designed to provide a condensed, comprehensive overview of current economic and financial developments. It presents charts and commentary on a broad range of topics that include labor and financial markets, consumer behavior and the global economy.