U.S. consumer spending rose at the fastest pace in nine months while incomes soared by a record amount in March, reflecting billions of dollars in government support payments aimed at putting the country firmly on the road to recovery.
Consumer spending rose 4.2% last month, the Commerce Department said Friday, the best showing since a 6.5% spending increase in June. Spending had fallen 1% in February as frigid winter weather disrupted sales.
Incomes surged by a record-breaking 21.1% in March after having fallen 7% in February. The big gain reflected delivery of billions of dollars in relief payments with individuals getting up to $1,400 payments from the $1.9 trillion support package President Joe Biden pushed through Congress last month.
The strong gains offer yet more evidence that the economy is poised for a rapid recovery following last year’s pandemic-triggered recession. Economists are counting on strong consumer spending, which accounts for two-thirds of economic activity, to power a rebound this year with a trio of economic factors coming to a head: trillions of dollars in government support; increased mobility due to vaccinations; a surge in pent-up consumer demand.