“It’s been up all year and March was a phenomenal month for us,” said Griffiths, who has been in business for 42 years. “In our industry, it’s been kind of spotty around the country, and the beginning of April was a little slow, but traffic has been pretty good the last couple of weeks.”
Griffiths said a mild winter helped his early numbers, and he blamed tax payments for the slower April.
“I think people are just realizing the better value of some innovations in our business,” he said.
Slow wage growth and softer consumer spending gains are the latest evidence that the economy might be weakening after a strong first two months.
Economists say a warm winter made the economy look better because it caused some activity that normally occurs in spring — from hiring to home sales — to occur in January and February. That made March’s gain smaller.
Dan Fiehrer, vice president of Fiehrer Motors Inc., said he thinks the increase in consumer spending will continue.
“We’ve seen a gradual increase for the last year,” Fiehrer said. “It’s not huge, but it’s still an increase. Some people have regained employment and the stock market is not in terrible shape either. I think the signs are there that things aren’t too bad.”
A more troubling factor in the long run is that Americans are receiving little or no pay raises. “Real” income — income adjusted for inflation — has been growing too slowly to sustain healthy increases in consumer spending, many economists say.
After-tax income rose just 0.6 percent in the first three months of 2012 compared with a year earlier. That was the smallest gain in two years.
“Real incomes will need to grow at a faster rate to prevent consumption growth from slowing,” said Paul Dales, senior U.S. economist at Capital Economics.
Before the Great Recession, a healthy gain in consumer spending was between 5 percent and 6 percent a year. March’s increase was roughly half that pace.
And if income, adjusted for inflation, continued to grow at March’s rate, the annual growth would be roughly 2.5 percent. While that’s better than a decline, economists consider it a weak figure.
The U.S. economy depends on consumer spending for roughly 70 percent of activity. Many people have been increasing their spending by saving less.
For the full January-March quarter, consumer spending rose at an annual rate of 2.9 percent, the fastest pace in more than a year. The increase was a bright spot in an otherwise sluggish quarter. Dales noted that spending in January and February drove the quarterly increase.
Without better pay, that trend isn’t sustainable. The savings rate edged up to 3.8 percent in March, after dropping to a 30-month low of 3.7 percent of after-tax income in February.
And income, adjusted for inflation, inched up just 0.2 percent after declining for two straight months.
In the January-March quarter, the economy grew at an annual rate of 2.2 percent. That was down from a 3 percent annual growth rate in the October-December period. The weakness mainly reflected slower gains in government spending and weaker business investment.
An inflation gauge tied to consumer spending rose a modest 0.2 percent in March. Over the past 12 months, the index has risen just above the Federal Reserve’s 2 percent inflation target
A healthy job market could reinvigorate consumers because more jobs mean more money to s(pend. But the economy created just 120,000 jobs in March — half the pace of the previous three months.
Economists predict that employers will have added 163,000 jobs this month, below the pace from December through February.
One positive change since the winter: Gas prices appear to have peaked. That would give consumers more to spend elsewhere.
The nationwide average for a gallon of regular gasoline stood at $3.83 on Friday, down eight cents from a month ago, according to AAA’s fuel gauge report.
The nation’s restaurant owners reported a great month and are as optimistic as they’ve been since before the recession, according to data released Monday.
Restaurant owners reflect the schizophrenic nature of the nation’s economic measurements: Young’s Dairy owner Dan Young said his business is up 25 percent so far this year and, “I haven’t felt this confident in many, many years,” while Jay’s Restaurant owner Amy Haverstick said after strong first two months of 2012, her restaurant’s sales fell sharply in March.
Both consumer spending and restaurant industry health are closely watched indicators of the national economy. Consumer spending accounts for 70 percent of economic growth, and the food-service industry, which employs about 10 percent of the American workforce, is highly dependent on the consumers’ discretionary spending.
Shanon Morgan said many restaurant chains have been offering discounts and other deals that may be driving up national sales numbers. “I still think people are hanging onto their money,” Morgan said.
Other restaurant owners across the country apparently share local owners optimism. The National Restaurant Association’s Restaurant Performance Index (RPI) matched its post-recession high in March, the association announced Monday. The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 102.2 in March, up 0.3 percent from February and equaling its post-recession high that was previously reached in December 2011. In addition, the RPI stood above 100 for the fifth consecutive month in March, which signifies expansion in the index of key industry indicators.
“The first quarter finished strong with a solid majority of restaurant operators reporting higher same-store sales and customer traffic levels in March,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are solidly optimistic about sales growth and the economy in the months ahead ... .”
Mark Fisher and the Associated Press contributed to this story.
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