Consumer spending climbed in April by the most in almost seven years, a sign U.S. households are ready to help jump start growth after a first-quarter slowdown.
Personal spending, which measures how much Americans paid for everything from raincoats to restaurants, increased 1.0% in April from a month earlier, the Commerce Department said on Tuesday. That was the biggest one-month jump since August 2009.
Consumption had climbed 0.2% in February and was flat in March.
Bloomberg reports that households will need to do the heavy lifting if a growth rebound is to materialize this quarter as global demand and corporate investment remain sluggish. Continued increases in payrolls and a gradual pickup in wages should help give consumers the means and the willingness to spend, pleasing economists, “You definitely want to see that pickup in April to fit into the story of a second-quarter rebound,” Sophia Kearney-Lederman, an economic analyst at FTN Financial in New York said before the report. Supporting the increase, “we have seen strong payrolls and incomes coming up, we’ve seen vehicle sales rebound, and we saw housing had a pretty good month.”
Tuesday’s report also showed steady gains in income, suggesting the labor market remains robust, and signs of firming inflation. Federal Reserve officials are watching those key metrics as they weigh another move on the central bank’s benchmark interest rate. The Fed next meets June 14-15, and then July 25-26.