U.S. consumer spending in April rises at fastest pace in almost 7 years

U.S. consumer spending in April rose at the fastest pace in almost seven years, indicating that U.S. economy will bounce back in the second quarter after a slow start to the year, the U.S. Commerce Department reported Tuesday.

Personal spending surged 1 percent in April from the previous month, the largest monthly gain since August 2009, the Commerce Department said. When adjusted for inflation, personal spending edged up 0.6 percent last month, the biggest increase since February 2014.

Personal income increased 0.4 percent in April after rising by the same margin in the previous month, while personal savings rate declined to 5.4 percent from 5.9 percent in March, the Commerce Department said.

The price index for the personal consumption expenditure (PCE), a gauge for the inflation level preferred by the U.S. Federal Reserve, increased 0.3 percent from a month earlier, the largest gain since May 2015.

The core PCE price index, excluding volatile food and energy, increased 0.2 percent from the previous month and 1.6 percent from a year ago, still below the central bank's target of 2 percent.

April's improvement in personal income and spending boosts economists' confidence that the U.S. economy will bounce back in the second quarter after a disappointing start to the year, as consumer spending accounts for about two-thirds of economic output.

The U.S. economy grew at an annual rate of 0.8 percent in the first quarter of this year, higher than the advance estimate of 0.5 percent, but lower than the 1.4 percent increase in the previous quarter, the Commerce Department reported last week.

Fed Chair Janet Yellen said Friday that an interest rate hike is "probably" appropriate in the coming months if the U.S. economy picks up as expected. The central bank will hold the next policy meeting on June 14-15. Enditem