USA consumer spending took a record nosedive last month as Americans hoarded cash during the coronavirus pandemic, new data show.
United States consumer spending dropped by a record in April as the COVID-19 pandemic undercut demand, buttressing expectations that the economy could contract in the second quarter at its steepest pace since the Great Depression.
The US savings rate, however, soared to record heights as Americans hoarded more money than ever before.
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Consumer spending accounts for more than two-thirds of USA economic activity, and that plunge supports expectations that the economy could shrink in the second quarter at its steepest pace since the Great Depression.
While economists have long urged Americans to save more, it's coming at a price as reduced spending threatens to crater the economy.
Core PCE price index to fall 0.3% in April while Personal Income and Spending are expected to plunge to a six-decade low. As The Post has been reporting, retailers large and small have been attempting to open their doors through appointments in states like NY only to get shut down again. That was the biggest drop since the government started tracking the series in 1959, and eclipsed the previous all-time decrease of 6.9 per cent in March.
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Personal income, which includes wages, interest and dividends, increased 10.5% in April, primarily reflecting a sharp rise in "government social benefits" through federal coronavirus stimulus programs. Those included $1,200 checks distributed to taxpayers under the $2.2 trillion CARES Act and a $600-a-week boost to unemployment benefits.
Economists polled by Reuters had forecast consumer spending plummeting 12.6 percent in April. The drop in spending fueled the jump.
The Commerce Department said today consumer spending, which accounts for more than two-thirds of USA economic activity, plunged 13.6 per cent last month.
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