Consumer Spending Climb Fastest Pace in nearly Seven Years
By Jeffrey Sparshott - Wall Street Journal
May 31, 2016
April consumer spending advanced the biggest one-month jump since August 2009. This is the latest sign of stronger economic growth following a sluggish start to the year.
Personal spending, which measures how much Americans paid for everything from raincoats to restaurants, increased 1.0% in April from a month earlier, the Commerce Department said on Tuesday.
Household spending accounts for more than two-thirds of economic output in the U.S. and has been a driving force for the expansion for more than five years.
Now it looks like the economy is picking up again, following a familiar pattern of a gloomy winter leading into a brighter spring.
“After a six-month lull, consumers emerged able and willing to spend more freely in early spring,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics. “This is good news for the economy as solid employment, firming wage growth and upbeat confidence should support the upbeat momentum in the second half of the year.”
Tuesday’s report also showed steady gains in income, suggesting the labor market remains robust and signs of firming inflation.
Consumer spending on durable goods was particularly robust in April likely reflecting healthy auto sales during the month.
Consumer Sentiment Index hits 11 Month High
By JOSH MITCHELL - Wall Street Journal
May 27, 2016
Americans are more confident than at any time in almost a year, as cheap gasoline, low interest rates and a rebound in stocks boost the economy’s prospects.
A measure of consumer sentiment rose to a reading of 94.7 in May, up 5.7 points from April’s reading of 89, the University of Michigan said Friday. That marked the biggest jump in a single month since 2013 and the highest the index has been since last June’s 96.1 reading.
Economists surveyed by The Wall Street Journal expected sentiment to hit 95 in May.
Friday’s figure is below a preliminary estimate of 95.8 that the University of Michigan released earlier this month. Still, the revised figure suggests confidence has risen sharply, boosting hopes the economy will rebound this spring from a sluggish winter.
Consumer spending reflects more than two-thirds of economic demand in the U.S. Economists believe when consumers are feeling confident, they are more likely to spend on everything from cars to restaurant meals, helping businesses, and the economy, grow.
April Home Sales Blows the Roof Off
By Ross Finley - Rueters
May 27, 2016
It’s fair to say U.S. pending home sales in April blew the roof off. Even the most optimistic forecast was more than a country mile short of the 5.1% rise in a key index measuring the number of contracts for houses soon to be sold.
US pending Home Sales
This sudden spike in the index to its highest in more than a decade is significant for several reasons.
First, throughout this entire recovery, a breakout of this magnitude in any set of data has been extremely rare.
Crucially, this is a major improvement in a measure of actual turnover in the housing market rather than an average asset price, which of course can fluctuate wildly based on very few transactions whether that be a house, a share, a bond, an exchange rate.
An increase in the number of homes changing hands is critical for economic growth because with each sale to a new buyer, large purchases necessarily follow: refrigerators, furniture, all sorts of other household goods and services.
It’s not only pending home sales that are looking a lot better. New home sales also jumped in April by their biggest amount in nearly a quarter century to an 8-year high.