Consumer spending went up 0.5 percent in April to $80.3 billion, with a $112.6 billion boost in the services sector that helped offset a $32.3 billion decrease in expenditures on goods, according to the monthly report by the Bureau of Economic Analysis (BEA) on Friday (May 28).
Entertainment, dining out and lodging all reflected increases in the services space, while spending on nondurable goods — led by food and beverages — dropped. There was a slight uptick in durable goods expenditures, with increases seen in motor vehicles and parts.
April’s uptick in spending is lower than the 4.7 percent increases seen in March, which was boosted by federal pandemic relief funds.
The spending surge prompted economists to forecast a 10 percent increase in the gross domestic product (GDP), coupled with the increase in vaccination rates and household savings, The Wall Street Journal reported.
“For the economy to be sustainably healthy, you need spending on services,” said Joseph LaVorgna of Natixis, a financial-services company, per WSJ. “People have been flush with cash, and their limits to what they can spend on have been compromised.”
Spending in restaurants is up, fueled by vaccinations and a reduction in lockdowns and restrictions. In a PYMNTS interview, Rob Kenny, director of restaurant partnerships at Dosh, said that as people go out and become more active, they are “more engaged with restaurants.” Census data shows that spending at bars and restaurants went 2 percent in April to $66 billion — a 30 percent increase over February.
As of March 13, more than 2 million people were vaccinated against COVID-19 — about 12 percent of the U.S. adult population. A PYMNTS consumer survey showed that 55 percent of consumers were comfortable with the safety of vaccinations and were planning to make an appointment. Just 17 percent of respondents indicated that they don’t trust the shots and won’t get vaccinated.