Consumer Spending Rises in May

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Associated Press

Consumers didn’t exactly shop until they dropped, but they did boost spending in May, a fresh sign that they still are doing their part to keep the economy going.

The Commerce Department said Friday that consumer spending nudged up 0.1% last month. That matched April’s increase, which turned out to be an improvement from the government’s first estimate of a 0.1% decline.

Americans’ incomes, including wages, interest and government benefits, rose by a modest 0.3% in May, up from a 0.2% advance in April.


That’s encouraging news because income growth is a main force behind future spending by consumers, economists say.

Separately, the University of Michigan said its June index of consumer sentiment fell to 89.7 this month, compared with 92.1 in May.

“Confidence remained shy of May’s postwar high but appeared to be recovering more strongly as June ended,” said Maury Harris, chief economist at UBS Investment Research. “Low spirits are not restraining shopping.”

Consumer spending accounts for two-thirds of economic activity in the United States. Because of that, the behavior of shoppers is a major factor in shaping the economy’s recovery.

“Given how wet the weather was in May in many parts of the country, it was surprising that anyone had any interest in visiting the malls,” said Joel Naroff, president of Naroff Economic Advisors.

“This report tells us that we can still count on consumers to hold up the economy.”

The Commerce Department said consumers trimmed spending on durable goods, such as cars and appliances, by 0.7% in May, a reversal from a 2.7% rise in April.


For nondurable goods, such as clothes and food, spending dipped by 0.1% in May, an improvement from April’s 1.3% decline.

Consumers increased spending on services by 0.5% in May, up from a 0.3% rise.

Economists said consumers showed more inclination to spend in April and May than the 0.1% increases registered for each month suggest, because those numbers don’t take into account falling prices and discounts for some goods and services.

When adjusted for price changes, spending rose a modest 0.3% in both months.