Personal spending surged more than expected in April, according to the Commerce Department.
Spending rose 1.0% in the last month, above expectations of a 0.7% increase.
Meanwhile, personal income rose 0.4%, in line with economists’ expectations.
The Core PCE price index, which excludes volatile food and fas costs, rose 0.2% in April compared to the previous month, in line with expectations.
This report showed that US consumer spending was off to a pretty solid start in the second quarter.
“We now think that real consumption will increase about 3.5% saar in 2Q (previously: 3.2%) and believe there is some additional upside risk to our 2.0% real GDP forecast for the quarter,” wrote JP Morgan’s Daniel Silver in an note to clients.
“The overall tone of this report was very constructive, and the solid rebound in spending will likely be interpreted at the Fed as a key indication that the economic recovery has regained its footing after the missteps over the past three quarters,” wrote TD Securities deputy chief US macro strategist Millan L. B. Mulraine in a note to clients.
“…the strong PCE performance and continued progress on inflation will likely lift the odds of a July hike, though we would need to see further confirmation in other data before any consideration of changing our current call for a September move,” he continued.