Spending by consumers in the United States went down in March after the strongest advance in five months. This was an indicator that the largest part of the economy lost momentum as the first quarter closed.
Purchases gained 0.2 percent, which was more than projected and reflecting an increase in outlays for utilities and other services, after a 0.7 percent advance the previous month. This was according to the Commerce Department report. Another report showed more American signed contracts to buy previously owned homes in March.
Higher payroll taxes took effect in January and this started to have an impact on American workers. It lessened consumer spending, which accounts for around 70 percent of the economy. Federal Reserve officials are set to meet this week and they are likely to continue with the record monetary stimulus program that has helped improve the housing sector.
The National Association of Realtors said its index of pending existing home sales went up 1.5 percent in March after a modified 1 percent drop that was bigger than the initial report. Low mortgage rates as well as the improvement in the labor market helped the housing market. The increase in property values have made Americans put their homes on the market. It would help ease the limited supply o available homes as spring selling season starts.
Stocks increased after the reports while investors are optimistic that the Fed will continue with its stimulus plans. The Standard & Poor’s 500 Index reached record level. It increased 0.7 percent to 1,593.61 at the close of trading in New York.
Economic confidence in the euro area went down more than the estimates made by economists in April. The euro region struggled to get out of the recession. The bailout of Cyprus also resulted to concerns about debt crisis in the region.