Sat, 15 Aug 2020

US Consumer Spending Up, But Could Dip as COVID Caseload Grows

Voice of America
01 Aug 2020, 04:05 GMT+10

U.S. consumers increased their spending by 5.6% in June, the Commerce Department said Friday, following a record 8.5% consumer spending jump in May.

Analysts, however, say the effects of a rapidly increasing coronavirus caseload could wipe out the turnaround.

"The pace of the [economic] recovery looks like it has slowed since the cases began that spike in June," said Federal Reserve chief Jerome Powell at a press conference Wednesday.

The spending increase was bolstered by economic reopening, federal stimulus payments and federal unemployment benefits, said the report.

But as the U.S. pandemic has worsened, surpassing 4.5 million confirmed infections, many areas that reopened in June have put their plans on hold. The District of Columbia and Puerto Rico, alongside 25 states, have reported a rise in cases over the past two weeks, according to The New York Times.

Meanwhile, the government's one-time stimulus checks have largely been spent, and an expanded federal unemployment benefit system, which gave recipients $600 a week, will end Friday.

After a 12.1% surge in personal income in April, largely driven by federal aid, personal income declined 1.1% in June, following a 4.4% drop in May, according to the Commerce Department report.

Friday's report came just one day after the department revealed that the U.S. economy shrank by an annualized rate of 32.9% from April to June. It was the worst quarterly GDP fall on records that date back to 1947, and three times as bad as 1958, the next worst year. The plunge in economic activity was driven by a drop in consumer spending, which makes up about 70% of the economy.

More New York City News

Access More

Sign up for New York City News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!