Consumer Spending Edges Higher in May

Washington, DC, June 28, 2010--Consumer spending in the U.S. increased in May more than forecast, perhaps a sign households are gaining confidence in the recovery.

Purchases rose 0.2% after little change the prior month, Commerce Department figures showed Monday. Incomes climbed 0.4% and the savings rate increased to the highest level in eight months.

Demand may accelerate as gains in payrolls, longer workweeks and rising pay give Americans the means to spend. Federal Reserve policy makers last week pledged to keep interest rates low to ensure households weather the fallout from the European debt crisis, unemployment hovering near a 26-year high and tight credit.

The median estimate of economists surveyed called for a 0.5% advance in incomes. Wages and salaries in May rose 0.5% for a second month.

The savings rate increased to 4% last month, the highest level since September, to $454.3 billion.

The report showed also showed inflation was stabilizing. The inflation gauge tied to spending patterns increased 1.9% from May 2009 after a 2% increase in the 12 months through April.