Americans are digging out their wallets, according to figures released Friday by the U.S. Commerce Department.
Consumer spending down south, which accounts for two thirds of the economy, rose by 0.4% with increased spending on motor vehicles, eating at restaurants, and hotel accommodation. Income rose by 0.5%.
The department went on to say that consumer spending had increased on autos, hotel accommodation, and eating in restaurants. Data for April was revised upward by 0.6%, double the initially reported 0.3% gain. Economists had predicted a 0.4% - 0.5% rise.
Adjusted for inflation, consumer spending rose 0.2% in May. This metric, referred to as "real consumer spending," rose by the same amount in April. The modest gains indicate that spending is struggling to gain momentum after slowing down in Q1.
Consumer spending rose 0.9% annually in Q1, the slowest rate in a year. The economy grew 3.1% in Q1, boosted by exports and stockpiled inventory as well as government spending on defense and infrastructure such as highways. Spending on goods last month rose by 0.5%, with durable goods like motor vehicles rising 1.7%, while spending on services rose by 0.4%.
Incomes rose by 0.5%, while wages gained 0.2%. Savings rose to $985.4 billion U.S. from $975 billion in April.
