A pedestrian checks her phone while carrying a shopping bag in New York. (file photo)
Fri May 31, 2013 4:31PM GMT
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New official data show the US consumer spending fell in April as Americans are more cynical about their financial prospects.
According to a statement released by Department of Commerce on Friday, the country’s consumer spending dropped 0.2 percent last month.
The drop comes as analysts were expecting a 0.1 rise similar to what happened in March. The fall indicates that growth may be slowing as incomes have failed to go up.
Experts believe that higher taxes and deep government spending cuts have weighed heavily on the consumers’ pockets.
Consumer spending accounts for seventy percent of economic activity in the US.
The US Department of Labor said on Thursday that applications for state unemployment benefits increased by 10,000 to 354,000 during the last week, showing the companies in the country continue to fire their workers.
An April survey conducted by the Thomson Reuters/University of Michigan showed that the US consumer confidence dropped by 2.8 points from the previous month to 76.4.
The survey indicated that consumers are pessimistic about the economic outlook for the coming months.
Nearly six million Americans are currently receiving jobless benefits. However, the actual figure would have been much higher if state authorities had not stopped extending benefit programs.
The US economy shrank by 0.1 percent in the fourth quarter of 2012, casting doubt on the strength of economic recovery in the country.
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