Consumer Spending Rose in March
Posted on May 3, 2010Consumer spending rose in March the most it has in five months, according to new reports. There are other signs that hiring is increasing, as well. Incomes rose for the first time this year, which is another positive sign for the economy.
Growing demand at retailers such as Macy’s Inc. and Starbucks Corp. boost the odds hiring will accelerate, leading to a sustainable economic rebound. Household spending, which accounts for about 70 percent of the economy, may contribute more to the expansion in coming months as incomes rise.Spending on durable goods items, such as cars and furniture, increased by 3.4% in March, which is the most increase seen since August, 2009. Spending on services, such as dry cleaning and manicures, stayed the same. Spending on services accounts for 60% of all spending. That shows the real weakness in the economy, as people are still spending conservatively when it comes to maid services and other extras.
"Many people are feeling more comfortable and are willing to spend," said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who accurately forecast the gain in consumer spending. "We do need to see job growth to make this a sustainable recovery."
The median estimate of 66 economists surveyed called for a 0.6 percent increase in spending, after an originally reported gain of 0.3 percent increase the prior month. Projections ranged from advances of 0.2 percent to 1 percent.