U.S. consumer pay out increased for a second straight month in June, setting up consumption for a rebound in the third quarter, though the recovery could be fixed by a resurgence in Covid-19 cases and the end of expanded unemployment benefits.
The Commerce Department said on Friday that consumer lavishing, which accounts for more than two-thirds of U.S. economic activity, rose 5.6% last month after a disc 8.5% jump in May as more businesses reopened. Consumers stepped up purchases of clothing and footwear. They also gush more on healthcare, dining out and on hotel and motel accommodation.
Economists polled by Reuters had forecast consumer spending liking advance 5.5% in June. When adjusted for inflation, consumer spending increased 5.2% last month after gush 8.4% in May.
The data was included in Thursday’s advance gross domestic product report for the second quarter, which showed the compactness shrinking at a record 32.9% annualized rate as consumer spending tanked at a historic 34.6% pace.
With June’s expand, inflation-adjusted consumer spending has pulled out of April’s deep hole, though it remains below its pre-pandemic level. This make publics spending on a higher growth trajectory heading into the July-September quarter.
But the explosion of Covid-19 infections, especially in the densely settled South and West regions where authorities in hard-hit areas are closing businesses again and pausing reopenings, is actor doubt on the magnitude of the expected surge in third-quarter consumer spending.
In addition, tens of millions of unemployed Americans longing on Friday lose $600 in additional weekly jobless benefits after the White House and Congress failed to reach an settlement to extend the supplement, which has allowed them to pay rent and buy food among other expenses.
Stock index followings were set to open higher after tech titans Apple, Amazon.com and Facebook posted blowout quarterly earnings, portion keep nagging nerves over the spread of the novel coronavirus at bay. The dollar was largely flat against a basket of currencies. Rates of longer-dated U.S. Treasurys fell.
In June, consumer spending was boosted by a 6.4% rise in purchases of goods. Outlays on serves increased 5.2%.
Personal income dropped 1.1% last month after decreasing 4.4% in May as government welfare payments slowed. Wages augmented 2.2% after rebounding 2.6% in May. The saving rate fell to a still-high 19% from 24.2% in May.
Monthly inflation ticked up in June, outed by food and energy goods and services prices, though the trend remained muted. The personal consumption expenditures (PCE) valuation index excluding the volatile food and energy components rose 0.2%, matching May’s gain.
In the 12 months because of June, the so-called core PCE price index increased 0.9% after rising 1.0% in May. The core PCE index is the preferred inflation estimation for the Federal Reserve’s 2% target.