U.S. consumer spending rose for a second straight month in June, setting consumption for a recovery in the third quarter, though recovery may be limited by a resurgence in COVID-19 cases and the end of extended unemployment benefits.
The Commerce Department said Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 5.6% last month after a record 8.5% increase in May as it opened higher. many businesses. Consumers increased purchases of clothing and footwear. They also spent more on health care, dining out and accommodation in hotels and motels.
Economists surveyed by Reuters had predicted that consumer spending would 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 the advanced report of Gross Domestic Product on Thursday for the second quarter, which showed that the economy was shrinking at a record annual rate of 32.9%, while consumer spending was tanked at a historic rate of 34.6%.
With June rising, inflation-adjusted consumer spending has pulled out of the deep hole of April, though it remains below its pre-pandemic level. This causes spending on a higher growth trajectory to go in the July-September quarter.
But the outbreak of COVID-19 infections, especially in densely populated regions of the South and West, where authorities in hard-hit areas are closing businesses again and stopping reopening, is casting doubt on the magnitude of the expected rise in consumer spending. of the third quarter.
In addition, tens of millions of unemployed Americans will lose $ 600 in additional weekly unemployment benefits on Friday after the White House and Congress failed to reach an agreement to extend the supplement, which has allowed them to pay rent and buy food among other expenses.
The future of the stock index was set to open higher after tech titan Apple, Amazon.com and Facebook posted quarterly declining profits, helping keep annoying nerves spreading the new coronavirus to the breast. The dollar was mostly flat against a basket of coins. US Treasury prices fell the longest date.
In June, consumer spending increased by 6.4% on merchandise purchases. Expenditures for services increased by 5.2%.
Personal income fell 1.1% last month after falling 4.4% in May after government payments slowed. Wages rose 2.2% after falling 2.6% in May. The savings rate fell to a still high 19% 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 Index (PCE) excluding volatile food and energy components increased by 0.2%, matching the May gain.
In the 12 months to June, the so-called PCE price index rose 0.9% after rising 1.0% in May. The PCE base index is the preferred inflation measure for the Federal Reserve’s 2% target.