Consumers are spending, and the so-called “fuel-savings dividend” is trickling into the market, according to the latest consumer spending data from the U.S. Department of Commerce.
The department’s Bureau of Labor Statistics said consumer spending rose 0.9 percent in May — the largest gain since August 2009. Personal income showed a 0.5 percent increase, which was the same gain in April. And disposable income jumped 0.5 percent, which compares to a 0.4 percent gain in the previous month.
The personal saving rate, which is measured by the BLS as personal saving as a percentage of disposable personal income, was 5.1 percent in May, which compares with 5.4 percent in April. May’s data support prior reports that consumers are spending more money as income increases. But they’re not necessarily doling out cash for fashion apparel. Big-ticket items such as cars and appliances seem to be where consumers are spending their money.
IHS Global Insight economist Chris Christopher said in a research note that “consumers came out swinging in May after taking a breather in April.”
The economist said gains in consumer spending “were broad-based; however, discretionary spending and autos did very well. Income gains have been relatively robust in May and April; but consumers used some of their unspent disposable income from April in the month of May.”
Christopher said the savings made at the gas pump “is starting to show up in relatively more robust consumer spending growth.” And as IHS Global Insight has noted in prior reports, the consumer spending outlook for the second half of the year is “looking significantly better than the first half. The first quarter was plagued with unseasonably colder winter weather, and the second quarter got off to a slow start in April. However, this report indicates that there is some momentum building on the spending front.”