Gross domestic product grew at a 1.8% annualized rate from January through March, down from a prior reading of 2.4%, Commerce Department data showed yesterday. Consumer purchases were trimmed to a 2.6% advance -- still the fastest in two years -- from the 3.4% gain estimated last month as Americans cut back on services from vacations to legal advice.
The saving rate increased to 3.2% from 3%. Wages and salaries climbed 0.3%.
Disposable income, or the money left over after taxes, increased 0.4% after adjusting for inflation, today’s report showed. It climbed 0.3% in the prior month.
Adjusting consumer spending for inflation, which renders the figures used to calculate gross domestic product, purchases rose 0.2% in May after a 0.1% decrease in the previous month, today’s report showed.
Price-adjusted spending on durable goods, including automobiles, increased 1% in May, the biggest gain so far this year, after a 0.2% advance the prior month. Purchases of non-durable goods, which include gasoline, rose 0.5%.
Household outlays on services dropped 0.1% in May for a second month. The category, which accounts for about 64% of the total, is typically difficult for the government to estimate. Spending on services grew 1.7% in the first quarter, revised down from a prior estimate of 3.1%, accounting for most of the downward revision in household spending, figures yesterday showed. The update reflected new information from a government survey.
The Commerce Department’s price index tied to spending, the gauge tracked by Federal Reserve policy makers, increased 0.1%. The so-called core price measure, which excludes food and fuel, also rose 0.1% from the prior month and was up 1.1% from May 2012, matching the record low.
One area of spending that remains a bright spot is automobiles. Cars and light trucks sold at a 15.2 million annualized rate in May, putting 2013 on course to be the best year for the industry since 2007, data from automakers show. Ford Motor Co. said it is adding 2,000 workers and a third shift at its F-150 factory in Missouri to increase production of pickups beginning in the third quarter.