Personal consumption -- which includes purchases from cars to sliced bread -- was up a seasonally adjusted 0.9 percent, the Commerce Department said. This was the largest gain since August 2009 and even exceeded Wall Street expectations, which estimated a 0.6 percent rise in consumer spending.
Spending on durable goods, which include cars, jumped 2.7 percent, following a modest 1.3 percent increase in February. Purchases of non-durable goods, which include gasoline, rose 0.9 percent.
Household spending on services increased 0.4 percent, with a the biggest contributor being utilities. Spending on health care also rose, though by less than in the prior two months.
“Growth in economic activity has picked up recently, after having slowed sharply,” the Federal Open Market Committee said in a statement following a meeting in Washington. “Household spending appears to be rising more quickly.”
The Commerce Department reported Wednesday that the U.S. economy grew by a meager 0.1 percent in the first quarter, largely helped by consumer spending.
Consumer spending accounts for nearly two-thirds of the U.S. economy's output. Harsh winter weather caused consumer spending to remain subdued in December and February, but Thursday's numbers show how spending helped the U.S. economy offset falling exports and business investment.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to investors that March's spending spurt, largely aided but auto sales, "cannot be sustained."