U.S. consumer spending rises
Personal consumption expenditures rose 0.4% in April, the fastest pace in four months.
WASHINGTON — Americans ratcheted up their spending in April at the fastest pace in four months in a sign that the economy has rebounded this spring after a lackluster winter.
The new data could help push Federal Reserve officials to hike a key interest rate again when they meet in two weeks.
Personal consumption expenditures increased 0.4% in April, up from 0.3% the previous month, the Commerce Department said Tuesday. Americans had more money to spend, with personal incomes also rising 0.4% — twice the pace of growth in March.
“Consumers are back out in force this quarter, spending their hearts away after taking the first quarter of the year off,” said Chris Rupkey, chief financial economist at Mitsubishi UFG Union Bank in New York. “Fed officials can continue with their gradual pace of rate hikes as the economy remains on course for stronger growth this quarter and throughout the rest of the year.”
Consumer spending, which accounts for about twothirds of U.S. economic activity, increased just 0.6% from January through March. That was the worst performance since late 2009 and helped contribute to a lackluster 1.2% annual growth rate in the first quarter.
Fed policymakers said after their May 2-3 meeting that they thought the economic weakness was “likely to be transitory.” They indicated they were ready to enact another small increase in the benchmark short-term interest rate if economic data strengthened as they expected.
Economists are expecting growth to improve to about a 3% annual rate in the second quarter. April’s stronger consumer spending is a sign those forecasts are correct.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said Tuesday’s data showed that consumer spending is “on course for a solid rebound” in the second quarter.
Another key indicator will come Friday, when the Labor Department is expected to report solid growth of about 185,000 net new jobs in May.