Wednesday, June 1, 2016

Stronger Spending

U.S. consumer spending recorded its biggest increase in more than six years in April. The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 1.0 percent last month. Consumption had climbed 0.2 percent in February and was flat in March.

Last month's increase was the largest since August 2009. The biggest-growing type of purchase:  automobiles. Personal income, including earnings from wages and other sources, rose 0.4 percent in April.

While these are good signs for the economy, they may also be a sign of increasing inflation. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.2 percent after edging up 0.1 percent in March. That left the increase in the year-on-year core PCE rate at 1.6 percent.

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