US consumer spending recorded a boost in April, mitigating fears of an economic slowdown after disappointing figures for first quarter.
Consumer spending increased by 0.4 percent last month, its biggest increase in four months. The figure is one of the most important gauges of economic stability, with consumer spending accounting for more than two-thirds of US economic activity.
April’s increase was the biggest since December, alleviating worries over an initial slowdown in the first quarter of the year and easing concerns about second-quarter economic growth going forward. Consumer spending dropped to its slowest pace in more than seven years in the first quarter, pushing domestic product growth to a 1.2 percent annual rate in the first three months of the year.
The fears over a slowdown have led the Federal Reserve to put a hold on their programme of rate hikes until it an be proved the negative sentiment is “transitory”. However, the US central bank lifted rates by a further 25 basis points back in March, and steadily rising inflation has led to calls for further policy tightening.