In yet another sign that American consumers are coming back to life, personal spending in May rose by the most since August 2009.
Personal spending rose 0.9% in May, more than expected and the best reading in almost six years.
Economists forecast a 0.7% increase in spending after spending was flat in April.
In a note to clients after the report, Paul Ashworth at Capital Economics said, "May's increase was the biggest monthly gain in six years and pretty much confirms that the earlier weakness in first-quarter consumption, which 'only' increased by 2.1%, was a temporary weather-related blip."
Ashworth added, "We are finally seeing signs of consumers beginning to spend the gasoline savings they have been sitting on since the start of this year."
In May, personal income rose 0.5%, in line with expectations and equal to last month's revised reading of a 0.5% uptick in income.
This report also gives us a reading on personal consumption expenditures — a measure of inflation — which rose 0.1% over last month and 1.2% over the prior year in May on a "core" basis, which excludes food and gas.
Both of these increases were in line with expectations.
And so while inflation doesn't seem to be showing up in the economy, Americans are seeing their incomes continue to increase and are finally showing signs of being willing to spend a bit more money.
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