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US Consumer Spending Sees Biggest Jump in Six Years

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Consumers are spending, wages are up and inflation is rising—all signs that point to stronger economic growth in the U.S. despite starting the year on a sluggish note.

U.S. consumer spending, which accounts for the majority of economic activity, increased more in April than it has in the last six years, according to data released by the Commerce Department Tuesday. The number jumped 1 percent in April after being flat in March and ringing in at a much slower 0.2% in February.

People spent more on durable goods, and cars and car parts made up the bulk of April’s increase, jumping 2.2%. Purchases of nondurable goods, where clothing falls, increased 0.7%, compared to a 0.4% increase in March.

Consumers were also paying more for their purchases.

The personal consumption expenditures price index (PCE price index), or the average increase in prices for all domestic personal consumption, increased 1.1% from April last year, and excluding food and energy, prices ticked up 1.6%.

More money in their pockets played into the dollars consumers doled out in April. Wages and salaries increased $38.6 billion, compared to a $30.7 billion increase in March, which led to a 0.5% increase in disposable income.

“After a six-month lull, consumers emerged able and willing to spend more freely in early spring,” Gregory Daco, head of U.S. macroeconomics at Oxford Economics, told The Wall Street Journal. “This is good news for the economy as solid employment, firming wage growth and upbeat confidence should support the upbeat momentum” for the second half of 2016.

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