Rebate checks goose consumer spending

Consumer spending increased in May as the stimulus-package rebate checks gave consumers increased purchasing power and inflation forced them to pay more. Personal consumption increased 0.8%, compared with April, according to data from the Department of Commerce. The increase in spending was the largest since spending rose 1.0% in November 2007. Personal income increased a seasonally adjusted 1.9%, compared to the previous month, marking the largest gain since personal income rose 3.2% in September 2005. Incomes rose 0.3% in April, which was revised from an estimated 0.2% increase. Real disposable income — after taxes and adjusted for inflation — increased 5.3%, marking the largest increase since 1975, when the government also sent out stimulus checks. As part of the stimulus package, the government sent out $48.1 billion in rebate checks in May after passing along $1.9 billion in April. The government is expected to send out $106.7 billion this year. The Core Personal Consumption Expenditure price index, which excludes food and energy, rose 0.1% in May. It has increased 2.1% in the last year.