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Consumer Spending Increases as Income Rises

May 3, 2012

U.S. consumer spending rose in March following the largest gain since August 2009, concurrent with rising incomes, according to Commerce Department numbers.

Consumer Spending in U.S. Increases as Incomes Rise

U.S. consumer spending rose in March following the largest gain since August 2009, concurrent with rising incomes, according to Commerce Department numbers.

Household purchases underpinned by an improving job market and warmer weather climbed 0.3 percent following a revised 0.9 percent increase in February that was stronger than first reported. Incomes reached a three-month peak with a 0.4 percent gain. Commerce data showed that household spending advanced 2.9 percent in the first quarter, while the saving rate rose from 3.7 percent to 3.8 percent.

Unusually mild temperatures may have encouraged U.S. consumers to go shopping and eat out, while retailers posted sales gains in March as stores offered discounts and shoppers stocked up on spring apparel and equipment. There also has been an uptick in consumers’ leisure spending, with Starwood Hotels & Resorts Worldwide reporting that earnings in the first quarter climbed by more than a factor of four.

“This report sets up fairly well for the second quarter,” says Barclays Capital economist Peter Newland. “What was encouraging was that the income numbers improved. Our expectation is that job growth does increase gradually” this quarter.

From “Consumer Spending in U.S. Increases as Incomes Rise”
Bloomberg (04/30/12) Chandra, Shobhana
 

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