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In March, American consumer increased their consumer spending by the fastest rate in 9.5 years. Consumer spending is the largest single component of American GDP. Accelerating growth in March consumer spending is a positive sign for GDP growth in the second quarter. Reuters‘ Lucia Mutikani writes:
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged 0.9 percent as households stepped up purchases of motor vehicles and spent more on healthcare. Consumer spending edged up 0.1 percent in February. Data for January was revised up to show consumer spending rising 0.3 percent instead of the previously reported 0.1 percent gain.
The release of the February spending data was delayed by a five-week partial shutdown of the federal government that ended on Jan. 25. Economists polled by Reuters had forecast consumer spending jumping 0.7 percent in March.
When adjusted for inflation, consumer spending increased 0.7 percent in March. This so-called real consumer spending was unchanged in February. The data was included in last Friday’s first-quarter gross domestic product report.
March’s surge in real consumer spending suggested an acceleration in consumption was likely in the second quarter. Consumers spending increased at a 1.2 percent annualized rate in the first quarter, the slowest in a year. The overall economy grew at a 3.2 percent rate last quarter.
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