Americans extended a spending binge in April as they continue to catch up on activities they held off on during the pandemic, propelling a broad economic recovery, the Wall Street Journal reported. After months of buying goods, many households are now shelling out more for services, dining out, traveling, and even visiting the spa. Consumer spending rose by 0.5% in April the Commerce Department said Friday—a solid increase, though slower than the 4.7% gain the prior month, which was fueled in part by federal stimulus checks. The burst in spending is the biggest reason that economists are projecting gross domestic product to jump at an annual rate of about 10% this spring. It is being fueled by rising vaccination rates, falling business restrictions and ample household savings, much of it from the federal government. Friday’s report showed a 13.1% drop in household income—a decline that is likely temporary, and due to earlier stimulus efforts by the government. Income had risen sharply in March as the government sent most households $1,400 checks as part of Covid-19 stimulus efforts. Despite the drop, Americans are sitting on a huge pile of cash. Households have saved about $2 trillion more than they would have absent the pandemic and federal relief efforts in response to it, according to Morgan Stanley.
