Washington, DC. June 28--Americans spent more freely in May, as consumption rose by the biggest mark in over two years amid strong gains in income.
The Commerce Department said personal consumption rose 1.0% in May, up from a revised 0.2% increase in April. April personal consumption had been previously reported as rising 0.3%. Personal income rose 0.6% in May. The May rise in consumption was the largest increase since a 2.1% increase in October 2001, the Commerce Department said.
The price index for personal consumption expenditures excluding food and energy, a favorite inflation gauge of Federal Reserve policy makers, rose in May by 0.2%. Year over year, personal consumption expenditures less food and energy rose 1.2%.
Economists had predicted vigorous increases in both income and spending, based on rising payrolls and wages so far this year, and booming auto sales during May. A Dow Jones Newswires-CNBC survey of 13 economists had forecast personal income would rise 0.5% and spending would increase 0.8%.
Disposable personal income, or income after taxes, climbed 0.6% in May, following a 0.6% advance in April.
Spending on durable goods -- meant to last at least three years -- rose 1.7%, after a 0.6% decrease in April. Non-durable goods rose 1.2%, after falling 0.1% in April. Spending on services grew 0.7% in May.
Personal saving as a percentage of disposable personal income was 2.2% in May, down from 2.6% in the prior month.
