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Pace of economy moderates

Asia's economic troubles are lapping at American shores: Incomes stagnated in U.S. goods-producing industries, manufacturing activity slowed and construction decreased.

Consumers, though, kept right on spending.

Reports from the government and a private group offered abundant evidence that economic growth was ratcheting down to a more moderate pace after clipping along at a rapid 4.2 percent annual rate in the first quarter.

During March, the last month of the quarter, consumers increased their spending by a healthy 0.5 percent. But they had to dip into savings to do it because income growth was a moderate 0.3 percent, the smallest in seven months.

The savings rate _ savings as a percentage of after-tax income _ slipped to 4.2 percent in March from 4.4 percent the month before.

Wages grew only 0.2 percent, helped by increases for government and service-industry workers. But wages were unchanged in goods-producing industries and down slightly in distributive industries. Economists saw the figures as a reflection of the decline in export sales to Asia.

The slowdown continued in April, according to an index of business activity compiled by the National Association of Purchasing Management. It indicated continued growth in manufacturing, but at a slower pace. Employment levels declined a bit.

"The basic message is that the economy boomed in the first quarter but the most rapid growth for this year is probably now behind us," said economist Lynn Reaser of NationsBank Corp. in Jacksonville.

She predicted the impact of Asia will cut economic growth to a rate between 2 percent and 2.5 percent for the rest of the year.

Separately, the Commerce Department said construction spending fell 0.5 percent in March _ the worst drop in 15 months. Construction of single-family homes rose 2.2 percent to an all-time high. However, spending on apartments, offices and a wide range of government projects declined.

The various hints of coolness pleased the stock market, which took a 147-point tumble on Monday because traders feared overly strong growth would prompt the Federal Reserve to raise short-term interest rates.

The Dow Jones Industrial Average, which shot up 112 points Thursday, continued its recovery Friday, rising 84 points to close at 9,147.07.