CONSUMERS CURB SPENDING : INCOME TAXES TOOK BITE IN APRIL; FURTHER GROWTH PREDICTED.

Byline: John D. McClain Associated Press 

Consumer spending grew at a slower pace in April as income taxes absorbed a respectable gain in personal incomes.

Analysts contended that the jump in tax payments was a one-time event and said spending, which shot up at an unsustainable pace in the January-March quarter, would continue at a moderate rate.

Consumer spending represents about two-thirds of the nation's economic activity.

Financial markets remained nervous about the possibility of a Federal Reserve interest rate increase to further curb economic growth and prevent any increase in inflation. Stocks and bonds were lower.

``What we saw in the first quarter was a strong gain in spending, fueled by increased consumer confidence and refinancing of mortgages because of lower rates,'' explained economist Richard Berner of the Mellon Bank in Pittsburgh.

``Now we're seeing spending slowing somewhat to about 2.5 to 3 percent,'' he added. ``It's moderating, but still healthy.''

After shooting up at a 3.6 percent annual rate in the first quarter, the steepest in more than two years, spending edged up just 0.1 percent to start the second quarter, the Commerce Department said Friday.

At the same time, personal incomes rose 0.5 percent in April for the second consecutive month, fed in part by the end of the General Motors Corp. strike late in the previous month.

Private wages and salaries, the most closely watched component of income, increased $16.2 billion in April, up from $15.6 billion in March.