U.S. experiences 1.9 increase in consumer spending in July
The U.S. Commerce Department has shown in a report released on Friday August 28, 2020 that there was a 1.9% increase in consumer spending in July last month.
July increase which is the third straight monthly increase in consumer spending would cushion the struggling economy amidst the pandemic which has led to about 27 million people unemployed.
The report on Friday also showed that after a two-month decline in income level, July gain has brought about a 0.4 increase in income.
The report comes amidst uncertainty that plagued the U.S. with businesses struggling and unemployment rate exceptionally high as the pandemic continues to ravage the country’s economy.
Similarly, the report comes weeks after the Federal unemployment benefit of $600 per week has expired depriving millions Americans their alternative source of income and in turn cuts down consumer spending.
Some economists said that economy has been deprived a vital source of spending money and has left many families desperate.
The government has however made a move to give out another set of financial rescue that was enacted in March, but congressional Republicans and Democrats have differed in the appropriateness of allocating more relief fund to the unemployed and the states
As the coronavirus pandemic continues to ravage the economy, growth is being held back as several industries such as tourism, travel and entertainment continue to feel the impact of the virus.
In a report on Thursday, the government disclosed that last week there was about 1 million people who applied for unemployment benefits.
According to a survey by the National Association for Business Economics, of the economist polled, two-thirds were of the belief that the country’s economy is still plunged in recession, while about half of them said that it might take until 2022 before the economy would regain its pre-pandemic status.
In an attempt to grant the much needed financial aid to the states and unemployed, President Donald Trump on Aug. 8 signed an executive order that would help states increase their weekly benefits by $300 or $400.
About 39 states have so far expressed interest to apply for the Federal grants. However, the days the package would be given out and how long it would last is yet to be disclosed.
The Federal Reserve on Thursday announced plans to keep interests rates to almost zero despite 2% inflation rate which has exceeded the target level. The plan is based on a belief that low jobless rates would result.
With the plan, households and businesses would see borrowing rates becoming drastically low for the coming years.