Americans modestly increased their spending last month as they remained cautious of the impact of the coronavirus pandemic — particularly amid a new surge in confirmed cases and the absence of a stimulus bill to boost the United States economy.
According to the Commerce Department, consumer spending — which accounts for more than two-thirds of the country’s economic activity — rose by 1.4% in September. Economists had predicted that the metric would rise 1%.
It marked the fifth consecutive month that consumer spending climbed since the outbreak took hold in the U.S., but the slight improvement signaled that shoppers were still hesitant about forking over cash on apparel and accessories, as well as cars, electronics, home goods and more. (Comparatively, consumer spending surged in the late spring and early summer months, with an 8.6% jump in May and a 6.2% gain in June.)
The data also showed that personal income — a measure of what households receive from wages and salaries, as well as government aid — advanced 0.9% in September following a drop of 2.5% in August, when additional federal unemployment benefits as part of the CARES Act expired for millions of Americans.
With Election Day only four days away, many Americans had hoped for a new stimulus deal that would provide much-needed financial aid for individuals, families, businesses and states. However, Senate leaders left the Capitol on a break early this week, making it practically impossible for an agreement to be reached by Nov. 3. (The Senate is scheduled to be back in session on Nov. 9 — a week after the election — while House members are not slated to return until Nov. 16.)
The report comes just one day after two better-than-expected economic reports were released: weekly jobless claims data and the U.S.’s gross domestic product levels.
According to the Department of Labor, unemployment applications for the week ended Oct. 24 hit 751,000 — a decrease of 40,000 from the previous week’s upwardly revised level. It represented the ninth consecutive week that applications remained below the 1 million mark. Economists forecasted there would be 778,000 filings last week.
In addition, the Bureau of Economic Analysis reported that the country’s GDP grew at an annualized and seasonally adjusted rate of 33.1% between July and September — the fastest rate on record in the third quarter. (Prior to the pandemic, the biggest-ever quarterly rise in the GDP was a 16.7% annualized improvement in 1950.)