Bloomberg (05/31/13) Shobhana Chandra

Consumer spending fell in April for the first time in nearly a year, the U.S. Department of Commerce reported Friday. Spending fell 0.2% following a 0.1% increase in March that was smaller than previously stated. Incomes have stagnated, suggesting consumer spending will struggle to recover without more substantial improvements in the labor market.

“Spending growth is going to be soft,” says Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Pittsburgh. “Inflation is too low from the [U.S. Federal Reserve’s] perspective, so they are going to be cautious about tapering” bond purchases geared to boost the economy, he says. “We will see better growth toward the end of the year.”

Reuters (06/02/13) Jason Lange

Experts say that if the next U.S. jobs report shows a significant gain in employment in May, bond investors could bid interest rates higher in response to the likely end of the U.S. Federal Reserve’s bond-buying program. There are concerns that higher interest rates would put a damper on economic recovery. However, Evariste Lefeuvre, an economist at Natixis, believes the bond market putting upward pressure on rates could be good news, signaling the shift from an economy dependent on Fed support to a healthy economy that no longer needs such support.