The U.S. government reported that spending by consumers fell 0.1% in April, an $8.1 billion drop and the first decline in a year. It missed forecasts of a 0.2% gain.
Still, there are three reasons to discount the spin saying the number points to slower-than-expected growth at midyear.
1. The weather did it.
Sounds weird to still be talking polar vortex after Memorial Day but even if your idea of summer whites is sweat socks it's still true.
Look, consumer spending rose $117.6 billion in March -- a full percentage-point gain, the biggest since 2009. Why? Because it rose just 0.2% in January and 0.1% in December, when people were stuck at home in big swaths of the nation. In parts of February and March, Nanook of the North emerged from his igloo -- which, strangely, seemed to have journeyed as far south as Atlanta in January winter -- and spent pent-up money. In April, Nanook North (and Susie Southeast) reverted to the mean.
Look at the moving average of consumer spending and April spending was still 1.8% above the average of January through March, says Regions Financial chief economist Richard Moody. So don't make too much of the dip, he argues.
2. The drop is in a couple of categories that still look fine overall.
The simplest reason to discount today's news is the entire $8.1 billion drop can be attributed to lower spending on heat and utilities, which helped drive the modest gains in frigid December and January. Lower spending on autos, which dipped in February and surged in March, were another factor in the drop.