Inflation also rebounded in April. These signs of firming demand could allow the Federal Reserve to hike interest rates next month. Sasha Salama reports.
More signs of an economic rebound. Americans opened their wallets wider in April, boosting spending at the quickest pace in four months. Personal spending rose by 0.4 percent. That follows an unpwardly revised 0.3 percent gain in March. It's a sharp bounce back from the spending slowdown in the winter quarter that depressed economic growth. Consumer spending is key because it accounts for more than two-thrids of economic activity. FAO-Economics chief economist Robert Brusca said, "Business as usual report. It shows the ongoing rebound from a weak first quarter but it's nothing to get excited about." Inflation also rebounded. The personal consumption expenditures price index increased 0.2 percent in April. That's a sharp turnaround from the 0.2 percent drop in March. The core PCE that strips out energy and food that Fed policymakers watch closely rose 1.7 percent from a year earlier. It's getting close to the Fed's 2 percent target. The April data points to firming demand. That could allow the Federal Reserve to hike interest rates next month. But inflation is cutting into consumer spending and income growth.