Americans’ income and spending rose in April, a sign of economic resilience amid rising prices and warnings of a possible recession.
Consumer spending rose 0.8 percent in April, the Commerce Department said Friday. The increase followed a two-month slump in spending and beat forecasters’ expectations.
After-tax income rose 0.4 percent thanks to a strong labor market that continues to push wages up and bring more people into the workforce. This month’s Labor Department data showed that Americans in their prime working years were employed the most in more than two decades in April.
Consumer resilience is a mixed blessing for Federal Reserve officials, who worry that massive spending is fueling inflation but also don’t want it to slow so quickly that the economy slips into recession. The gradual slowdown in spending seen in recent months is broadly in line with the “soft landing” scenario politicians are seeking, but they have been careful not to declare victory too soon – a concern the April data could underscore.
It is unclear how long consumers can continue to support the economic recovery. Consumer savings built up during the pandemic have begun to dwindle, and there are signs that companies are starting to pull back on hiring. Stepping over the debt limit could further weaken the dynamics of the economyalthough there were indications Thursday night that leaders in Washington did the conclusion of agreements to reverse the default setting.
