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30 May 2017
Americans increased their spending in April at the fastest pace in four
months, bolstered by a solid gain in incomes. The strong results underscored
expectations that the economy is poised to rebound after a lackluster start to
the year. The Total Investment &
Insurance Solutions
Consumer spending rose 0.4 percent in April
after a 0.3 percent rise in March, the Commerce Department said Monday. It was
the best showing since December. Incomes also rose 0.4 percent, double the 0.2
percent March increase. The Total
Investment & Insurance Solutions
Consumer spending, which accounts for 70
percent of economic activity, grew at the slowest pace in seven years in the
first quarter. That was a key reason the economy, as measured by the gross
domestic product, expanded by just 1.2 percent at the start of the year.
Economists are hopeful GDP growth will rebound to around 3 percent in the
current April-June quarter.
A key inflation gauge preferred by the
Federal Reserve edged up a slight 0.2 percent in April, leaving prices rising
just 1.7 percent over the past year — the slowest 12-month gain this year and
below the Fed's 2 percent target. Even with inflation remaining contained,
economists believe the Fed will raise rates for a second time this year when
official meet on June 13-14, especially if the employment report due on Friday
shows job growth remaining strong. The
Total Investment & Insurance Solutions
With spending and incomes both up 0.4 percent
in April, the saving rate was unchanged for a third month at 5.3 percent of
after-tax income. It had been 5 percent in January.
The rise in spending was led by a 0.9 percent
rise in purchases of long-lasting durable goods, reflecting a rebound in demand
for autos after a weak first quarter. Spending on non-durable goods such as
clothing was up a solid 0.6 percent, and spending on services such as utilities
grew a moderate 0.3 percent.
The 1.2 percent GDP growth rate in the first
quarter was far below the targets set by President Donald Trump. During the
campaign, Trump blasted the Obama administration's economic policies, saying
they had contributed to the weakest recovery in the post-World War II period.
He promised to double growth from an anemic 2 percent annual rate to above 4
percent with his economic program featuring tax cuts, deregulation and tougher
enforcement of trade rules.
However, so far, Trump's economic program has
made little headway in Congress. He put forward last week a $4.1 trillion
budget for 2018, but it has attracted criticism from both Democrats and
Republicans for its sharp cuts in the government's anti-poverty programs.The Total Investment & Insurance
Solutions
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