Americans kept spending in April even as gasoline prices continued to surge, a sign that higher energy costs have not forced a broad retreat in household outlays.
Consumer spending rose 0.5 percent from March, the Commerce Department said Thursday. Gasoline and other energy goods were a major driver, rising 5.7 percent for the month. But the gains were not confined to the pump.
Spending excluding food and energy rose 0.4 percent in April. Spending excluding food, energy, and housing climbed 0.3 percent. Services spending excluding energy and housing also rose 0.4 percent, showing that consumers continued to spend across a broad range of categories even as fuel costs took a larger bite out of household budgets.
Spending at restaurants and hotels rose 0.75 percent and spending on recreational services jumped 1.4 percent. Those are highly discretionary categories that would likely see declines if consumers needed to pull back because of high gas prices.
That resilience was visible in the stock market on Thursday. Shares of Kohl’s, Best Buy, and Dollar Tree surged after the retailers gave investors reasons to believe shoppers are still spending when they find the right mix of price and value. Dollar Tree and Best Buy were up about 18 percent in midday trading, while Kohl’s climbed around 17 percent.
The April report suggests that gasoline prices are not crowding out the rest of the consumer economy. Gasoline absorbed a larger share of household budgets, but spending outside food and energy still rose. Services remained especially resilient, pointing to continued demand beyond the most price-sensitive goods categories.
The strength of the labor market likely explains much of the resiliency. Unemployment and jobless claims are very low. Excluding farm income, which declined due to the end of a short-lived farm aid program, personal income rose 0.23 percent in April. Aggregate private sector wages and salaries rose 0.25 percent and are up 3.86 percent from a year ago.
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