May 28, 2004

Consumer Spending Latest Indicator of Bush Boom

The latest economic indicator of the growing strength of the Bush economic boom is consumer spending, up stronger than analysts had expected.

Consumers - whose behavior plays a crucial role in shaping economic activity - increased their spending in April by a solid 0.3 percent, a good signal that the recovery remained firmly rooted as it entered the current quarter. The increase reported by the Commerce Department on Friday came after a brisk 0.5 percent advance in March and suggested that consumers continued to do their part to support the economy.

Americans' incomes, meanwhile, rose by a strong 0.6 percent in April, marking the largest gain since January 2001. The growth in income last month, which followed a 0.4 percent rise in March, was especially encouraging because that is the fuel for spending in the future. The income and spending figures are not adjusted for price changes.

Economists said an improved job climate is lifting wages and aiding income growth. "We are making our money the old-fashioned way, we are earning it," said Joel Naroff, president of Naroff Economic Advisors. "People have money to spend and they are doing just that," he added.