"If this weakness persists, then I think it will likely temper spending in coming months"
- Millan Mulraine, director of U.S. rates research at TD Securities USA LLC
Confidence among Americans tumbled to a nine-month low, while retail sales dropped by the most in nine months, adding to concerns that the world's largest economy is not on the path of recovery yet and the Fed will have to stimulate the economy for a longer time. The Thomson Reuters/University of Michigan said that their gauge of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. At the same time, retail sales decreased 0.4% the biggest since June, followed by a 1% gain in February, Commerce Department showed Friday. The latest figures are reflecting the results of a higher payroll tax, which weighed on consumers sentiment and willingness to spend more.
"If this weakness persists, then I think it will likely temper spending in coming months," said Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York. "The rollback on payroll taxes is beginning to have an impact on consumer spending activity and consumer confidence."
"Households are now making those difficult choices on how to adjust spending," said Ellen Zentner, a senior economist at Nomura Securities International Inc. in New York, who projected sales would drop. "We have no steam going into the second quarter."
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