Consumer spending across the U.S. was up 1.1% in March, according to a Friday (April 29) Commerce Department press release. The spending boost was led by increased cash outlays on travel, dining, gasoline and food, although spending on durable goods dropped for the second straight month, led by a dip in vehicle buys.
Personal income — including wages and government assistance — was up 0.5% month-over-month in March, while overall inflation jumped 0.9% from February and 6.6% year over year when food and energy were included (up 5.2% without them), the Commerce Department announcement says.
“We think consumers are going to continue to rotate more toward services spending,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics, in a report by The Wall Street Journal Friday. She expects the pickup in consumer spending should be sustainable, “but there are obviously large headwinds facing the consumer right now,” like inflation and supply chain disruptions.
Commerce Department data released Thursday (April 28) showed inflation-adjusted consumer spending for the first quarter made its fasted increase since last spring, with restaurant meals and healthcare leading the way. Consumers also spent more on services and durable goods, including cars in Q1.
Meanwhile, the U.S. unemployment rate was 3.6% in March and workers’ wages grew, but U.S. gross domestic product shrunk at a 1.4% annual rate in the first quarter of this year, the WSJ report says, largely because of a growing trade deficit.
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Consumer spending in February went up at a slower pace of 0.2%, down from a revised 2.7% increase in January, according to a March 31 report from the Commerce Department. Consumer spending accounts for more than two-thirds of U.S. economic activity. Personal income increased by 0.5% in February over January, which was largely flat.
Annual inflation, meanwhile, surged to 6.4% in February, using the department’s personal-consumption expenditures price index, which is the preferred gauge of the Federal Reserve.
