Americans Spent More in March

WASHINGTON (AP) -- Consumer spending rose at a faster pace than expected in March, although virtually all of the gain occurred because of big increases in the price of energy and other products.

The Commerce Department reported Thursday that consumer spending was up 0.4 percent in March, double the increase that economists had expected.

However, once inflation was removed, spending edged up a much slower 0.1 percent. That represented the fourth straight lackluster performance as consumers have been battered by record gasoline prices, a deep slump in housing and rising job layoffs.

In other economic news, the Labor Department reported that claims for unemployment benefits rose by 35,000 to 380,000. That was a much bigger increase than the 18,000 than private economists had expected and highlighted the strains that the weak economy is putting on the labor market.

The report on jobless claims came a day ahead of a report on unemployment for April. Economists expect that report will show that the unemployment rate edged up to 5.2 percent, from 5.1 percent in March. The economy is expected to lose 70,000 jobs, for the fourth straight month of job losses.

Consumer spending is being carefully watched out of concerns that too big of a slowdown will push the country into a recession, since two-thirds of economic activity comes from consumers.

The government reported Wednesday that the overall economy, as measured by the gross domestic product, eked out a tiny 0.6 percent growth rate in the first three months of this year as consumer spending slowed to the weakest pace since the second quarter of 2001, when the country was slogging through the last recession.

Despite the slightly positive GDP performance, many economists believe that the economy has fallen into a recession and it will be reflected by a negative GDP figure in the current April-June quarter.