American shoppers dug deep into their pockets during April to give the nation's economy a surprise boost.
Latest retail figures show a 1.4% rise, the fastest growth for seven months and double the expected increase. The numbers also confound gloomy predictions that consumers are tightening their purse strings.
Says Brian Wesbury, chief investment strategist at Claymore Advisors in Illinois: "If there was a 'soft patch,' it wasn't all that soft, nor did it last for long. The frenzy of apocalyptic warnings was completely unwarranted."
Cars, clothing, furniture and food were the purchases of choice last month. Spending on clothes was up 2.8% while spending on cars and car parts rose by 2.5%.
Other indicators for April have also prompted renewed optimism. The government said US firms added jobs at a strong pace last month, while hours and earnings rose. Improvement in the job market is is undoubtedly having a positive effect on consumer spending.
And, says Stephen Stanley, chief economist at RBS Greenwich Capital in Connecticut: "This is mighty impressive in light of the spike in gasoline prices. The consumer is hanging in there nicely."
Data sourced from USA Today Online; additional content by WARC staff