WASHINGTON — Consumers snapped back to life at the start of the year, renewing hopes the recession is losing steam.
Though the economy shrank again in the first three months, Americans stepped up purchases of cars, furniture and appliances. The surge in consumer spending, which accounts for about 70 percent of the economy, could set the stage for a rebound later this year.
Consumers boosted their spending at an annual rate of 2.2 percent, the most in two years. Spending on durable goods, including cars, furniture and appliances, rose at a 9.4 percent pace, the most in a year.
Many consumers have been fortified by fatter paychecks from tax cuts and smaller mortgage bills from refinancings. If they keep spending, businesses will need to replenish shrunken inventories, leading factories to boost production and nourishing economic activity.
Against that backdrop, many analysts think the economy is sinking less this quarter than it did from January through March. Most believe the economy could start growing again by summer, or more likely, by the final quarter of this year.
Federal Reserve Chairman Ben Bernanke and his colleagues, in opting against further action to shore up the economy at this point, detected glimmers that the recession might be easing.
“The economy has continued to contract, though the pace of contraction appears to be somewhat slower,” Fed policymakers said in a statement Wednesday, hours after the government released its report on the economy’s first quarter.
Though Fed policymakers noted that consumer spending “has shown signs of stabilizing,” they said spending still remains “constrained” by rising unemployment, falling home values and hard-to-get credit.
