Rising unemployment, consumer optimism that's weaker than it was six months ago and declining stock prices are causing consumers to rein in spending.
Consumer spending accounts for two-thirds of economic growth.
They had also expected a 0.2 percent rise in spending excluding automobiles after a previously reported 0.3 percent February drop. The consecutive declines in sales excluding autos were the first since February-March 1993, according to Commerce officials. Labor also said prices paid to producers fell in March for the first time in seven months. The producer price index dropped 0.1 percent. Federal Reserve Today's reports helps explain why investors expect Federal Reserve policy makers to lower interest rates a fourth time this year when they meet May 15.