During the month of April 2009, US consumers saved more of their money and spent less of it, even though their income levels rose, according to the most recent Personal Income and Outlays report from the Bureau of Economic Analysis, Retailer Daily reports.
US consumers’ personal consumption expenditures, which essentially reflect consumer spending, decreased $5.4 billion, or 0.1%, in April, according to BEA data. The BEA also estimates that during the month, personal income increased $58.2 billion, or 0.5%, and disposable personal income increased $121.8 billion, or 1.1%.
In comparison, during March 2009, personal consumption expenditures decreased $33 billion, or 0.3%, personal income decreased $25.9 billion, or 0.2%, and disposable personal income increased $8.2 billion, or 0.1%, based on revised estimates.
The BEA attributed the change in disposable personal income, which is personal income less personal current taxes, to provisions of the American Recovery and Reinvestment Act [pdf] of 2009, which reduced personal current taxes and increased government social benefit payments.? Excluding these special factors, disposable personal income increased $77.1 billion, or 0.7%, in April 2009, following a decrease of $8.7 billion, or 0.1%, in March 2009.
Consumers also managed to increase personal saving by 26.9%, to $620.2 billion in April 2009, compared with $488.7 billion in March 2009.? Personal saving as a percentage of disposable personal income was 5.7% in April, compared with 4.5% in March.
Increased consumer saving is not good news for the retail industry. However, retailers do have an opportunity to capture more of consumers’ increasing income levels. Government actions increasing disposable personal income also hold the potential to benefit retailers.
Another positive sign for retailers is the May 2009 performance of the Consumer Confidence Index, which increased from 40.8 in April to 54.9 in May. Much of the overall increase came from significant improvements in the Consumer Expectations Index, which measures consumer expectations for economic performance in the next six months. However, retailers also need to be cognizant of the continuing rise in consumer unemployment, which hit 8.9% in April.