WASHINGTON – Americans spent more in May than they did the month before, the first time in three months that consumer spending posted a monthly increase, the federal government said today.
The U.S. Commerce Department said consumer spending increased by 0.3 percent in May, after staying flat in April.
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Incomes rose 1.4 percent following the reduction in payroll taxes and increase in Social Security payments contained in the economic stimulus law signed by President Barack Obama in February, Bloomberg News reported.
In addition, the national savings rate climbed to 6.9 percent in May, its highest level since December 1993, and inflation slowed to just 0.1 percent, its smallest increase since records began in 1959, Bloomberg said.
“Consumer spending has largely stabilized,” James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Conn., told Bloomberg. Stimulus-related measures “have contributed to increasing spending power. It sets the stage for more growth in consumption, and should help jump-start the economy.”
But, O’Sullivan added, “Ultimately, we need the labor market to kick in as well.”
A separate report showed consumer confidence on the rise, as well. The Reuters/University of Michigan final index of consumer sentiment increased to 70.8 in June from 68.7 in May.
