US consumer spending rose 1.1% in March, according to a Commerce Department press release on Friday (April 29). The spending surge was led by increased cash spending on travel, food, gas and groceries, although spending on durable goods fell for the second straight month, led by a decline in vehicle purchases.
Personal income — including wages and government support — rose 0.5%m/m in March, while headline inflation rose 0.9%m/m in February and 6.6%/year when food and energy were added (up 5, 2% without them). Department of Commerce announcement says.
“We believe consumers will continue to focus more on spending on services,” Kathy Bostjancic, chief US economist at Oxford Economics, said in a Wall Street Journal report on Friday. She believes the increase in consumer spending should be sustainable, “but consumers are obviously facing major headwinds at the moment” such as inflation and supply chain disruptions.
Data from the Commerce Department released on Thursday (April 28) showed that inflation-adjusted consumer spending for the first quarter rose at the fastest rate since last spring, with restaurant meals and healthcare leading the way. Consumers also spent more on services and durable goods, including cars, in the first quarter.
Meanwhile, the US unemployment rate was 3.6% in March and workers’ wages were rising, but US gross domestic product shrank 1.4% annually in the first quarter of this year, the WSJ report said, mostly on the back of a widening trade deficit .
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According to a March 31 report by the Department of Commerce, consumer spending grew at a slower 0.2% in February, compared with a revised 2.7% increase in January. Consumer spending accounts for more than two-thirds of US economic activity. Personal income rose 0.5% in February from January, which was broadly flat.
Annual inflation, meanwhile, rose to 6.4% in February, using the Department’s Personal Consumption Spending Price Index, which is the Federal Reserve’s preferred measure.
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