U.S. Consumer Spending Up 0.8% In May, Personal Income up 1.9%

New York, NY (AHN) - U.S. consumer spending rose as incomes surged in the month of May, an indication that government's rebate may have helped restore confidence.

The government reports showed that personal spending and incomes grew by 0.8 percent in the month of May more than economists had projected.

The gain in personal consumption is the largest rise since 1.0 percent registered by the authorities in November 2007. Personal spending was up by 0.4 percent in April.

The Commerce Department said on Friday that incomes gained by 1.9 percent, which is the most since September 2005, while measures of inflation were lower than forecast.

The personal income measure is the biggest gain since 3.2% in September 2005. Personal income was up by 0.3 percent during April, which was revised up from 0.2 percent.

Analysts had projected consumer spending to increase by 0.7 percent andpersonal income to rise by 0.4 percent.

The increase in consumer spending and personal income were bolstered by the $48 billion in tax rebate checks sent out by the government, which was intended to stimulate the economy.

According to the Treasury Department, around $70.8 billion worth of tax rebate checks were distributed through June 20.

The report showed that the core inflation has also increased by 0.1 percent in May. The measure has been up by 2.1 percent in the past year.

The Commerce Department figures noted that the overall consumer prices have gone up by 3.1 percent during the past 12 months, which is the lowest year-over-year inflation since October 2007.

Wages and salaries gained by just 0.3 percent, while the private wage and salary disbursements increased $15.9 billion in the month of May, which had gone down by $9.6 billion in April.