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Consumer spend enjoys growth spurt due to lower gas prices, job market stability

Here is some good news as the last full week of June arrives and the big summer retail holiday weekend, July 4, looms ahead: consumers spent more money in May than they have in a long time.

June 27, 2015

Here is some good news as the last full week of June arrives and the big summer retail holiday weekend, July 4, looms ahead: consumers spent more money in May than they have in a long time.

Consumer spend jumped 0.9 percent in May, according to the Commerce Department, which represents the biggest increase in nearly six years, according to a reportat ArkansasOnline.

The federal agency is crediting growth in the U.S. job market as the prime spending factor. April’s consumer spend increase was 0.1 percent in comparison. May’s figure is the highest since 2009 when the federal government launched an automotive trade-in program that spurred intense car buying as a way to stimulate the sluggish economy.

The increased spend may also be due to lower gasoline costs.

"We are finally seeing signs of consumers beginning to spend the gasoline savings they have been sitting on since the start of this year," said Paul Ashworth, chief U.S. economist at Capital Economics, as reported by ArkansasOnline.

Earlier this month the federal agency reported that retail sales jumped 1.2 percent between April and May with auto sales, retail clothing and building materials at the top of spend area list. Retail spending by consumers is up 2.7 percent in the past year with increases of 8.2 percent in the restaurant and car sales segments.

"We're clearly seeing a nice acceleration on the part of the consumer," Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC, in the report. "It comes down to job growth and better income prospects. It's going to be a decisive rebound this quarter."