U.S. consumer spending rose for the second straight month in June, halting consumption to a third-quarter decline, although the recovery may be limited by a resurgence in cases COVID-19 and the end of extended unemployment benefits.
The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 5.6 percent last month after a record high. of 8.5% in May as more businesses reopened. Consumers have increased the purchase of clothes and shoes. They also spent more on health care, dinner out and hotel and motel accommodation.
Economists surveyed by Reuters had forecasts that consumer spending will advance 5.5% in June. When adjusted for inflation, consumer spending rose 5.2% last month after rising 8.4% in May.
The data was included in Thursday’s gross domestic product advance report for the second quarter of the year, which showed the economy declining at a record rate of 32.9% year-on-year as spending of the consumer is tanked at a historic pace of 34.6%.
With the rise in June, inflation-adjusted consumer spending took off from the deep hole of April, although it remains below its pre-pandemic level. This puts spending on a higher growth trajectory in the July-September quarter.
But the outbreak of COVID-19 infections, especially in densely populated southern and western regions where authorities in the affected areas are closing down businesses again and ceasing to open. again, they are questioning the expected magnitude of the increase in third-quarter consumer spending.
In addition, tens of millions of Americans are losing $ 600 in additional weekly unemployment benefits on Friday after the White House and Congress failed to reach an agreement to extend the supplement, which allowed them to pay rent and buy food among other expenses.
Stock index futures were set to open higher after technology titans Apple, Amazon.com and Facebook posted quarterly breakout gains, helping to keep nerves hanging during the spread. of the new coronavirus at bay. The dollar was largely flat against a basket of coins. U.S. Treasury prices dated longer fell.
In June, consumer spending was boosted by a 6.4% increase in purchases of goods. Costs for services increased 5.2%.
Personal income fell 1.1% last month after falling 4.4% in May as government welfare payments fell. Wages rose 2.2% after resuming 2.6% in May. The savings rate fell to 19% still high from 24.2% in May.
Monthly inflation marked in June, driven by prices of food and energy goods and services, although the trend remained silent. The personal consumption expenditure (PCE) price index excluding volatile food and energy components rose 0.2%, in line with the May gain.
In the 12 months to June, the so-called core PCE price index rose 0.9% after rising 1.0% in May. The core PCE index is the preferred inflation measure for the Federal Reserve’s 2% target.