US consumer spending rose for the second month in a row in June, increasing consumption in the third quarter, although the recovery could be limited by the resumption of COVID-19 cases and the end of extended unemployment benefits.
The Department of Commerce said on Friday that consumer spending, which accounts for more than two-thirds of economic activity in the United States, rose last month after a record 8.5% in May, when more companies reopened, 5.6%. Consumers have speeded up the purchase of clothing and footwear. They also invested more in health care, catering and accommodation in hotels and motels.
Economists contacted by Reuters agents predicted that consumer spending would increase by 5.5% in June. After adjusting for inflation, consumer spending rose by 5.2% in May last month after a sharp 8.4%.
The data were included in Thursday̵7;s previous report on gross domestic product for the second quarter, which showed that the economy was shrinking to a record 32.9% annual rate as consumer spending rose at an all-time rate of 34.6%.
With the June increase, inflation-adjusted consumer spending has withdrawn from a deep hole in April, although it remains below pre-pandemic levels. As a result, spending on a higher growth trajectory is heading to the quarter of July-September.
However, the outbreak of COVID-19 infections, especially in densely populated southern and western regions, where authorities in severely affected areas are re-closing businesses and suspending reopening, casts doubt on the extent of the expected increase in consumer spending in the third quarter.
In addition, tens of millions of unemployed Americans will lose $ 600 in additional weekly jobless benefits on Friday after the White House and Congress did not reach an agreement to extend the supplement, allowing them to pay rent and buy food in addition to other expenses.
Stock index futures opened higher after tech titans Apple, Amazon.com and Facebook released quarterly earnings, helping to keep nervous nerves over the spread of the new coronavirus. The dollar was largely offset against a basket of currencies. Prices of US bonds with a longer date fell.
In June, consumer spending was supported by a 6.4% increase in the purchase of goods. Expenditure on services increased by 5.2%.
Personal income fell by 1.1% last month after falling 4.4% in May when government benefits were paid. Wages rose by 2.2% after rising by 2.6% in May. The savings rate fell to 19% in May from 24.2% in May.
Month-on-month inflation rose in June due to food and energy products and services prices, but the trend remained subdued. The price index for personal consumption expenditure (PCE) excluding volatile food and energy components increased by 0.2%, which corresponds to the May profit.
In the 12 months to June, the so-called price index for nuclear PCEs rose by 0.9% after rising by 1.0% in May. The PCE base index is the preferred inflation measure for the 2% Federal Reserve target.