Consumer Spending

Consumer spending grew at a slower pace in April as income taxes absorbed a respectable gain in personal incomes, the government reported Friday. Analysts contended the jump in tax payments was a one-time event and said spending, which shot up at an unsustainable pace in the January-March quarter, would continue at a moderate rate. Consumer spending represents about two-thirds of the nation's economic activity.

For today's baby boomers, confronting the triple-whammy prospect of looming college costs, parents in retirement homes and a workplace that keeps shifting, the future may look somewhat shaky. So it would be surprising news to learn that they are in the catbird seat as consumers, with unprecedented clout that will continue to grow with the turn of the century. That's the scenario from one of the nation's leading forecasters.

Consumer prices surged 0.4% for March, matching the steepest increase in five years, with higher costs for everything from gasoline to food to clothing. However, retail sales barely increased during the month, government figures released Friday show. That and other reports suggest continued sluggish growth is in store, with only a modest rise in inflation in the months ahead, analysts said. Stocks and bonds rallied on the news, with the Dow Jones industrial average jumping 45.52 points to 5,532.

Consumers, locked in by severe weather in January, celebrated their release a month later with a buying binge and a return to their jobs that helped boost income by the largest amount in a year. At the same time, orders to U.S. factories suffered the steepest decline in 10 months. But analysts on Wednesday noted that when the volatile transportation sector was excluded, orders rose for the third straight month.

So much for the Age of Innocence. America's children are a rapacious bunch. Everywhere on the cultural landscape, they are gobbling up the newest, the coolest, the highest-tech. And they're armed with more than $20.3 billion annually, a figure that's growing at a rate of 15% to 20% a year. Two decades ago, the only things people were trying to sell kids were sweets and toys.

Americans' incomes and spending both posted healthy increases in November, but even with that good send-off for the Christmas sales season, actual results appear to be falling short of retailers' hopes. The Commerce Department reported Monday that personal incomes rose 0.5% last month, a solid rebound after showing no gain in October, while consumer spending was also up 0.5%. The spending increase followed a 0.7% rise in October.

Now here's a news flash from America: Last week, 42-year-old Kate Rhoad of Conroe, Texas--momentarily strapped for gift ideas--asked her 9-year-old son Travis whether there was anything he wanted or needed for Christmas. First, the kid went off and thought about it. When Travis came back a few hours later, Rhoad heard something that perhaps no other parent in the nation has heard--could even conceive of hearing--at this time of year. No, said Travis. He couldn't think of anything he needed.

By September, Deorothea Mash was already unhappy with the black and lavender couch she'd picked out in June. The colors made her "dizzy," she said, and clashed with her dining room. She wanted a change. Had the 58-year-old nurse's aide in Bismarck, Mo., bought the couch from a furniture retailer, such a change would have put her out $1,200, the price of the couch.

While most retail stores reported record sales in November, consumer electronics outlets continued to post sagging numbers. Best Buy and Circuit City reported an 8% drops in November same-store sales, or sales at stores open at least a year. Tandy Corp., parent company to Radio Shack, said same-store sales were down 2%, particularly in consumer electronics and personal computers. The drop was reflected in market trading Wednesday. On the New York Stock Exchange, Best Buy fell 37.