Consumer spending climbed in February by the most in five months and confidence unexpectedly improved in March, showing job-market gains are helping Americans overcome tax increases and concern about federal budget cuts.
Purchases, which account for about 70 percent of the economy, rose 0.7 percent after a 0.4 percent advance the prior month that was bigger than previously estimated, according to Commerce Department data today in Washington. Another report showed consumer sentiment advanced to a four-month high.
Record stock prices and rising home values combined with gains in wages are helping households repair finances left in shreds by the recession, making it easier to cope with a two percentage-point increase in the payroll tax. The pickup in spending at retailers including Macy’s Inc. (M) is giving the world’s largest economy a boost just as efforts to narrow the budget deficit prompt government cutbacks.