Personal income edged up 0.3 percent in April, the lowest rate in seven months and only half of the 0.6 percent increase in consumer spending, the government said.
The result was a drop in Americans' savings rate - savings as a percent of disposable income - from 5.8 percent in March to 5.5 percent in April. The rate had been 5.5 percent in February, up from 5.3 percent in January.The Commerce Department reported that incomes totaled a seasonally adjusted annual rate of $4.69 trillion following 8 percent gains during the three previous months. It was the lowest rate since it dropped to 0.2 percent in September.
Consumer spending totaled a seasonally adjusted annual rate of $3.68 trillion after 0.5 percent increases in both February and March. It was the largest gain since it jumped 1.2 percent in January.
Consumer spending is considered a barometer of economic health since it accounts for about two-thirds of the nation's economic activity.
"The April and March increases in personal income were affected by subsidy payments to farm proprietors," the department said. "The payments lowered the April change after raising the March change."
Excluding the subsidy payments, personal incomes rose 0.5 percent in both months.
The report said Americans' income after taxes slowed to a 0.2 percent increase from a 0.8 percent gain in March and a 0.7 percent jump in February. It had risen 0.9 percent in both December and January.
The key component of the income category - wages and salaries - rose $19.1 billion at an annual rate after a $15.4 billion gain in March.
The increase in personal spending, including everything but interest payments on debt, totaled $21.9 billion, up from $19.4 billion in March.
Purchases of durable goods - products expected to last at least three years - rebounded $3.8 billion from a $3.2 billion drop in March. Purchases of non-durable goods also bounced back, gaining $1.3 billion after falling $400 million the previous month.
Services gained $16.8 billion on top of a $23 billion rise in March.