The consumer spending that powers most U.S. econometric activity jumped a strong one percent in April, the biggest gain in about six years.
Tuesday's report from the Commerce Department says the gains were due to increases in purchases of cars and other expensive, long-lasting goods. PNC Bank Chief Economists Stuart Hoffman calls the report "good news" for economic growth in April, May, and June. He also predicts that inflation will rise a bit this year.
New data also show inflation rose a bit, but remains below the two percent rate that experts at the U.S. central bank say would help economic growth.
Top Federal Reserve officials are scheduled to meet in two weeks and will consider this and other reports as they decide how soon and how much to raise interest rates. Those rates were pushed down to record lows to boost growth during the financial crisis.
Experts worry that once the economy recovers, keeping interest rates too low for too long could over stimulate the economy and spark sharply higher inflation that could hurt growth. Experts at Wells Fargo Securities predict the Fed will not raise rates at their June meeting.
A separate report on housing from Standard & Poor's / Case-Shiller shows home prices rose more than five percent in March from the same time a year ago. Low mortgage rates and improving wages are encouraging home buying, but a limited supply of homes for sale is pushing up prices.
Friday, experts will publish the newest U.S. unemployment rate. The Bloomberg financial news service surveyed economists and the consensus is that the jobless rate will drop slightly to hit 4.9 percent. The survey also shows experts expect the economy to have a net gain of 158,000 jobs nationwide.