Consumer spending rose for a third straight month in July, but slowed considerably from prior months, signaling that the country’s economic rebound following state reopenings may be stalled — a situation echoed by the fact that joblessness in the United States remains high.
According to a report today from the Bureau of Economic Analysis, consumer spending in the U.S. inched up 1.9% in July, following a 6.2% gain in June and 8.6% jump in May.
Meanwhile, personal income in July rose 0.4% — the first time that data point has increased since April, when Americans received stimulus checks through the federal government’s CARES Act. The Commerce Department attributes this latest uptick in income to the lifting of “stay-at-home” orders in some parts of the country last month.
Offsetting those income gains, though, were decreases in government social benefits, which many experts believe have been propping up the U.S. economy as the coronavirus pandemic has continued to disrupt normal operations. Without those economic recovery payments, the outlook for August and beyond looks murky.
The federal government’s CARES Act programs — which provided financial relief to individuals and businesses affected by COVID-19 — for the most part expired at the end of July, and Democrat and Republican leaders in Congress have so far been unable to agree on another stimulus plan.
President Trump did issue a series of executive orders in early August that included extending the pandemic unemployment benefits using funds from FEMA’s Disaster Relief Fund, which should offer some benefit to Americans’ wallets. But the payments are half of what was provided through the CARES Act, and they expire on Dec. 27 — if not sooner, should FEMA’s fund run dry.
Although many businesses have reopened and workers are returning to their posts, economic activity is still well below levels prior to the pandemic. In late June, the Commerce Department reported that gross domestic product, which measures the output of U.S. goods and services, contracted at a seasonally adjusted annual rate of 5% in the first three months of the year. It marked the economy’s sharpest quarterly plunge since the 8.4% fall in the fourth quarter of 2008 at the height of the Great Recession.
As of today, more than 5.88 million people in the U.S. have been sickened by COVID-19, which has led to at least 181,000 deaths.