Consumer spending provides about two-thirds of economic demand in the world’s largest economy.
Photo: Christian Petersen/Getty ImagesConsumer spending likely rebounded last month, in what would be a sign that the U.S. economy is slowly recovering from the coronavirus-induced recession.
But a recent increase in coronavirus infections threatens any recovery.
The Commerce Department is expected to release its monthly report on household income and spending at 8:30 a.m. ET Friday. Consumer spending provides about two-thirds of economic demand in the world’s largest economy.
Spending crashed in April as many businesses remained shuttered under state and city orders to prevent spread of the virus. Many state economies reopened in May, and a surge in household income from the federal stimulus bill and unemployment insurance gave households money to spend.
Shoppers at the Arden Fair Mall in Sacramento, Calif., in late May.
Photo: Rich Pedroncelli/Associated PressThe big question now is whether the growth is sustainable. The April boost in personal income will likely be a one-off as aid programs expire, unless Congress approves new assistance. Millions of households in April received stimulus checks, up to $1,200 for individuals and $2,400 for couples. Some also received $600 a week in unemployment insurance on top of their normal jobless benefits. Research shows many Americans have spent a chunk of that money.
Meanwhile, new virus infections have picked up in 33 states recently, a Wall Street Journal analysis showed this week, and some businesses that reopened have shut back down. Texas on Thursday paused its reopening plans as cases and hospitalizations rose there.
SHARE YOUR THOUGHTS
How have you changed your spending habits during the crisis? Join the conversation below.
“The outlook still heavily depends on the public-health situation, which is still quite uncertain,” said Constantine Yannelis, a University of Chicago economist.
For now, many Americans appear ready to spend on things like cars, travel, and home furnishings after two months of being holed up.
Janece Kleban, a 37-year-old small-business owner from Washington, D.C., took her first trip last month since the pandemic started—staying in a cabin in Virginia’s Shenandoah Valley. Last week, she drove to Maryland to get her nails done and hair styled for the first time since mid-March.
“I was clean enough to go into a surgical procedure,” she said. “I had the face shield, and the mask.” The salon also took her temperature and made her sign a release, she said. She said she recently told herself that this pandemic could last for up to another 18 months, and she is slowly trying to figure out how much risk she is willing to take.
The U.S. economy’s trajectory will hinge on the ability and willingness of consumers like her to spend in coming months amid uncertainty about the virus.
There are other signs consumer spending is picking up. Car sales rose in May after falling in prior months. Mortgage applications to buy homes have risen to multiyear highs. Restaurant bookings are slowly picking back up, even though they remain far below pre-pandemic levels.
One factor is cheap money. The Federal Reserve has lowered its benchmark interest rate to near zero, and consequently, the cost of borrowing for things like homes, cars, furniture and other big-ticket items has dropped to historically low levels.
Low interest rates allowed Boston Interiors, a retail furniture chain in Massachusetts, to extend its standard refinancing plan for customers to 36 months from 24 months during the pandemic. That has allowed customers to make bigger purchases while keeping monthly payments low, said president Peter Theran.
Mr. Theran opened five of the company’s nine stores in early June. In the roughly three weeks since, business has been solid, with same-store sales running about even compared with a year ago. The morning they reopened, four or five customers were waiting outside, eager to get in.
“People have been in their house so long, their perceived flaws in their home are enormous to them now,” Mr. Theran said. “Things they were only mildly annoyed by are suddenly unbearable.”
Write to Josh Mitchell at joshua.mitchell@wsj.com
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
"may" - Google News
June 26, 2020 at 05:44PM
https://ift.tt/3g1oioE
May Consumer Spending Likely Rebounded, but Virus Surge Poses Economic Threat - The Wall Street Journal
"may" - Google News
https://ift.tt/3foH8qu
https://ift.tt/2zNW3tO
Bagikan Berita Ini
0 Response to "May Consumer Spending Likely Rebounded, but Virus Surge Poses Economic Threat - The Wall Street Journal"
Post a Comment