Price of gas falls, wallets open
<p>In a Sunday, April 15, 2012 photo, gasoline prices are posted at the Midway Plaza on the Pennsylvania Turnpike in Bedford, Pa. U.S. consumer prices were flat last month as cheaper gas offset modest increases for food, clothing and housing. The data indicate that inflation remains in check. The Labor Department says the seasonally adjusted consumer price index was unchanged in April, after a 0.3 percent gain in March. (AP Photo/Gene J. Puskar)</p>
WASHINGTON (AP) - Americans are starting to see some relief from higher gas prices, a change that could revive the economy in the months ahead.
Consumer prices were flat in April, largely because of a decline in gas prices. Lower prices at the pump may be combining with steady job growth to power more spending on big purchases.
Sales of autos, furniture and electronics all rose in April. And Americans spent more at restaurants and bars - generally a sign of confidence in the economy.
"Consumer spending looks to have started the second quarter on a solid footing," said Paul Ashworth, an economist at Capital Economics.
Despite the strength in key areas, overall retail sales increased just 0.1 percent last month, the Commerce Department said Tuesday. That modest gain followed two stronger months in February and March.
Cheaper gas offset some of the gains in big purchases. The mild winter was also a factor. In the previous two months, it boosted sales in areas such as building materials and gardening supplies. Spending in those categories fell sharply in April.
Still, economists were encouraged by the details in the report. Excluding autos, gas station sales and spending on building materials, so-called core retail sales increased 0.4 percent, a modest gain.
"All the categories that showed gains are positive signs for consumer spending going forward," said Leslie Levesque, senior economist at IHS Global Insight. "The categories where there were declines were mainly a payback for the warmer weather."
The positive signs come six months before voters will decide whether to give President Barack Obama a second term in an election focused heavily on the economy. Obama is trying to convince voters that the economy is on an upswing. His Republican rival, Mitt Romney, counters that the unemployment rate is a still-high 8.1 percent and argues that Obama's policies are weakening the recovery.
Recent job growth has contributed to higher consumer confidence. Employers have added 1 million jobs in the past five months, though the pace of gains has slowed recently.
Another reason to be optimistic: gas prices are falling after spiking earlier this year. The national average dropped to $3.73 per gallon on Tuesday, about 17 cents cheaper than a month ago, according to a survey by AAA. Sales at gas stations fell 0.3 percent in April.
"We had expected gas prices to be elevated until Memorial Day," Levesque said. "The fact that they have already retreated so much is a very good sign. It alleviates the strain on consumers' pockets."
Cheaper gas also kept inflation tame. Gas prices fell a seasonally adjusted 2.6 percent in April, the Labor Department said. That offset mild increases in the cost of food, housing, and clothes.
Overall, the consumer price index was flat. Excluding volatile food and gas costs, so-called "core" prices rose 0.2 percent.
In the past 12 months, prices have risen 2.3 percent, the smallest gain in more than a year.