Consumer spending in the US probably rose last month for the first time in three months and home sales increased as Americans became more confident the recession will end this year, economists said ahead of reports this week.
Purchases advanced 0.3 percent, according to the median of 58 estimates in a Bloomberg News survey ahead of Commerce Department figures due on Friday. Combined sales of new and existing homes likely improved to 5.18 million, capping the first back-to-back increase since 2006, the survey showed.
“There’s more optimism as we get further away from last year’s financial-market chaos,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd in New York. “Spending on the part of consumers seems to be picking up after a soft patch. It looks like housing has bottomed.”
Government efforts to restore the flow of credit and prop up incomes are allowing households to take advantage of retailer discounts even as unemployment soars.
The Commerce Department’s spending report may also show incomes increased 0.3 percent last month after gaining 0.5 percent the month before, mainly reflecting the tax cuts and transfers linked to the administration’s stimulus plan, economists said.
Sales of existing homes climbed 3 percent to an annual pace of 4.82 million, the highest level since October, when the economy was in the throes of the financial crisis, according to the survey median. Foreclosure-driven declines in property values are helping to reduce the glut of unsold houses. The National Association of Realtors’ report is due tomorrow.
The next day, Commerce data may show purchases of new homes rose 2.3 percent last month to an annual pace of 360,000.
In another sign of the improving economic outlook, the Reuters/University of Michigan final index of consumer sentiment probably rose to 69 this month, the highest level in nine months, from 68.7 last month, economists’ forecasts show. The figures are due on Friday.
Business in Las Vegas has “clearly bottomed out,” said Jim Murren, chief executive officer of casino company MGM Mirage.
“It’s just a matter of how long we’re going to be on the bottom, and that is what we’re debating internally,” Murren said in a telephone interview last week. “The business trends are no longer deteriorating.”
Some parts of the economy are lagging. A Commerce report due on Wednesday may show bookings for goods meant to last several years slid 0.8 percent last month, the survey showed. Durable-goods orders excluding transportation equipment may have also fallen.
GDP shrank at a 5.7 percent pace in the first quarter, the same as estimated last month, revised figures from Commerce may show. Figures are due for release on Thursday.
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