International Business: US economy off to strong start in second quarter – Gulf Digital News

International Business: US economy off to strong start in second quarter – Gulf Digital News

WASHINGTON: US consumer spending rose more than expected in April as households boosted purchases of goods and services, and the increase in inflation slowed, which could underpin economic growth in the second quarter amid rising fears of a recession.

The economy’s near-term prospects were also brightened by other data from the Commerce Department yesterday showing the goods trade deficit narrowed sharply last month. A record trade deficit caused a contraction in output in the first quarter.

“The economy can always turn on a dime, but at this point in the economic cycle, consumers are still spending their hearts out, keeping the recessionary winds at bay,” said Christopher Rupkey, chief economist at FWDBONDS in New York.

Consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.9 per cent last month. Data for March was revised higher to show outlays racing 1.4pc instead of 1.1pc as previously reported. The strength in spending is despite consumer sentiment being at its lowest level since 2011.

Goods spending increased a solid 0.8pc, driven by new motor vehicles, clothing, footwear, recreational goods as well as furnishings and household equipment. Demand for goods remains strong even as spending on services is picking up.

Services outlays rose 0.9pc as