U.S. consumers cut spending by the most on record for the second straight month in April while boosting savings to an all-time high, and the ...
WASHINGTON: U.S. consumers cut spending by the most on record for the second straight month in April while boosting savings to an all-time high, and the growing frugality reinforced expectations the economy could take years to recover from the COVID-19 pandemic.
The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, plunged 13.6per cent last month, the biggest drop since the government started tracking the series in 1959. It eclipsed the previous all-time decrease of 6.9per cent in March. Personal income surged a record 10.5per cent last month. Without the government money, income would have declined 6.3per cent with business closures pushing wages down 8.0per cent. The unprecedented economic upheaval saw the saving rate hitting a record 33per cent.
The economy is gradually reopening after nonessential businesses were shuttered in mid-March to slow the spread of COVID-19, raising hope the economic slump was bottoming. A survey on Friday showed consumer sentiment stable in May. The larger goods trade deficit is likely a drag on second GDP, which economists expect could drop at as much as a 40per cent rate, a pace not seen since the 1930s.
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