Consumer spending in March rose at the highest rate in close to a decade, according to data released Monday by the Commerce Department.
Spending on consumer goods rose $123.5 billion in March, a 0.9 percent increase, reflecting strength in one of the most crucial forces behind U.S. economic growth.
The increase in consumer spending was the largest in more than 9 years and after a sluggish economic end to 2018. Wages and salaries also increased 0.4 percent in March after rising 0.3 percent in February.
{mosads}The increases in consumer spending and wages are the latest signs of resilience for the U.S. economy as it approaches the eleventh year of expansion after the 2008 recession. U.S. gross domestic product grew by 3.2 percent in the first quarter of 2019, blowing by expectations of slower growth to start the year.
The U.S. job market has also remained strong, adding an average of 180,000 workers each month in 2019 while maintaining an unemployment rate of 3.8 percent. Weekly jobless claims have fallen toward record lows while the difference between open jobs and available workers remains close to record highs.
The data comes a day before the Federal Reserve’s Federal Open Markets Committee (FOMC) meets to consider the future of U.S. monetary policy. The FOMC, which guides Fed interest rates, has signaled a pause on interest rate hikes while inflation remains well below the central bank’s target range.
The Fed’s preferred gauge of inflation, the personal consumption expenditures (PCE) index minus food and energy prices, rose just 1.6 percent in the year since March 2018. The bank considers 2 percent annual inflation the ideal level for a healthy economy.
The PCE index minus volatile food and energy prices stayed flat in March after rising 0.1 percent in February.