positive effects, at a time when a lot of the growth burden is riding on u. s. consumers, consumers appear to be disinclined to spend much of the gains from cheaper prices at the pump, preferring, it seems, to strengthen household balance sheets instead. relative to expectations predicated on the boost to real income from lower gas prices, consumer spending so far this year has been undeniably weak, especially given a backdrop of improving labor market prospects, solid consumer sentiment, and improving credit availability. consumer spending is reported to have increased at an annual rate of only 1. 8 percent in the first quarter – far below the 5. 3 percent increase in household real disposable income. moreover, monthly data on expenditures through april do not suggest a large bounceback going into the second quarter. as always, these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. for details on the most recent private - sector forecasts, see aspen publishers ( 2015 ), blue chip financial forecasts, vol. 34, no. 6 ( june 1 ). more information about the gdpnow forecast is available on the federal reserve bank of atlanta ’ s website. bis central bankers ’ speeches continuing softness in consumption this year would naturally raise some questions about a more persistent change in consumer behavior. for example, the financial crisis may have altered expectations of longer - run income growth and attitudes toward risk such that consumers may be more cautious about spending gains in income and wealth that are perceived to be temporary. modest growth in consumer spending would be significant because strength in other categories of aggregate demand remains elusive. although the data on april housing starts and permits look promising, the current level of single - family housing permits is little changed from the level in the fourth quarter of last year, and average growth in residential investment over the past year and a half has been tepid. given low interest rates and continued job gains, it is puzzling that housing starts have remained far below the trend levels implied by population growth. tight credit for borrowers with less - than - pristine credit may explain some of the weakness. but it is also possible that attitudes toward homeownership have changed as a result of the financial crisis and recent recession, especially among the millennial great recession generation. meanwhile, government spending has contributed very little, on average, to gdp growth in recent quarters. with the budget control act of 2011 restraining federal outlays and with

s government bond holdings 700 tril. yen tril. u. s. dollars japan : jgbs ( lhs ) united states : treasury notes and bonds ( rhs ) dec - 02 dec - 05 dec - 08 dec - 11 dec - 14 dec - 17 dec - 20 dec - 23 note : figures are monthly data for japan and data on last wednesday of each month for the united states. sources : board of governors of the federal reserve system ; bank of japan. chart 4 long - term interest rates % united states japan - 2 cy 87 note : the long - term interest rates are market yield on u. s. treasury securities and jgbs at 10 - year constant maturity. sources : board of governors of the federal reserve system ; ministry of finance. chart 5 large - scale survey on the corporate sector reasons why raising prices was difficult price competition reasons why the difficulties in raising prices have eased % wider recognition that price rises are inevitable % significant rise in inflation consumers'high thriftiness increased cases of price hikes at competitors sluggish inflation solid demand despite price rises potential damage to corporate image product shortages due to supply constraints costs associated with arrangements within the firm and with business partners industry regulations and systems governing price setting other expectations for higher inflation first phase second phase current phase other no easing in difficulties note : in the left - hand chart, firms were asked to respond to the question by dividing the past 25 years since the mid - 1990s into three phases, which comprise ( 1 ) the " first " phase, defined as the period from the mid - 1990s to the 2000s, ( 2 ) the " second " phase, defined as the 2010s, and ( 3 ) the " current " phase, defined as the period over the past one year. source : bank of japan. chart 6 base pay increase ( spring wage negotiation ) y / y % chg. base pay increase cy 2023 cy 2024 + 2. 1 % + 3. 6 % - 1 cy 80 note : figures from 1980 to 2014 are those published by the central labour relations commission, while those from 2015 to 2024 are figures released by rengo. the figure for 2024 is from rengo's fifth aggregation. sources : japanese trade union confederation ( rengo ) ; central labour relations commission.