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Increase in Consumer Spending - 7/6/15

During the last couple months, the American consumer has been showing signs of life.  In May, consumer spending in the U.S. surged, registering the largest monthly increase in nearly six years.  The U.S. Commerce Department recently indicated that consumer spending expanded by zero point nine percent in May after rising just zero point one percent in April. 

This is an indication that the economic impacts of expanded hiring and cheap gasoline are now rippling more forcefully through the economy.  In May, as reported by the Associated Press, personal income increased by a healthy zero point five percent in May and the savings rate fell but remained above five percent. 

The implication is that collectively consumers retain plenty of spending power and that retail sales and other forms of spending are likely to be brisk for the next several months.  Retail sales increased for a third consecutive month in May.  Auto dealers posted particularly strong gains.  Sales were also up at home centers like Home Depot and Lowe’s.  Consumers also spent more at clothing stores and online.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.