The New York Times notes unexpected weakness in consumer spending:
April 14, 2005
Higher Gas Prices Cut Consumer Spending
By JENNIFER BAYOT
Consumers spent more on gasoline last month and far less than expected over all, the government said yesterday, suggesting that prices at the pump are starting to curb other purchases … The new numbers and other recent data, including a slowdown in job growth and a widening trade deficit, suggest that the economy is expanding at a more tepid pace, which could ease the Federal Reserve's concerns about inflation…
…"This was a downer," said Robert J. Barbera, chief economist at ITG/Hoenig, a brokerage firm in Rye Brook, N.Y. Added to other economic data, the figures suggest that "the notion that the economy was really taking off and really firing on all cylinders is wrong."
The numbers show an unexpected weakening in consumer spending, which amounts to two-thirds of total economic activity.
Behind that growth were the lowest interest rates on consumer debt since the 1960's, but the specter of rising rates may be joining higher energy costs and slower wage growth in damping shoppers' spirits…