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BUSINESS Saturday 1 auguSt 2020
U.S. consumer spending up 5.6%, but virus could stall gains

unemployed to stay afloat.
But the $600 a week is ex-
piring, and Senate Republi-
cans have favored extend-
ing that benefit only at a
much-reduced level.
Now, though, the White
House and some of its Re-
publican allies in the Sen-
ate are signaling they want
to extend, at least tempo-
rarily, the $600-a-week un-
employment benefit.
Still, any final agreement
with the Democratic-led
House, which has passed
a much more far-reaching
rescue package, may be
far off.q

In this June 17, 2020 file photo, a sign advertises a sale at an H&M store along Lincoln Road Mall in Miami Beach, Fla.
Associated Press

By MARTIN CRUTSINGER followed an even bigger early July," Gregory Daco, Over the past week, the
AP Economics Writer 4.4% fall in incomes in May. chief U.S. economist at average number of COV-
WASHINGTON (AP) — Those sharp declines fol- Oxford Economics, wrote ID-19 deaths per day in the
American consumers in- lowed a 12.1% surge in in- in a research note. "With United States has climbed
creased their spending in comes in April as a flood the health situation dete- more than 25%. And the
June by a solid 5.6%, help- of government aid began riorating, fiscal aid running number of confirmed in-
ing regain some of record to be distributed, notably dry, employment cooling fections has topped 4.4 mil-
plunge that occurred after $1,200 checks for many and confidence ebbing, lion, which could be even
the coronavirus struck hard individuals and a $600 a the risks are skewed to the higher because of limits on
in March and paralyzed week in federal unemploy- downside." testing and because some
the economy. But the virus' ment benefits. The income and spending people are infected with-
resurgence in much of the The $1,200 checks have report came against the out feeling sick.
country could impede fur- been largely spent, though, backdrop of a devastating A result is that any tentative
ther gains. and the $600 in unemploy- economic collapse in the economic recovery could
Last month's rise in con- ment benefits is expiring. spring. stall out as state and coun-
sumer spending followed A standoff in Congress has The government estimated ty governments roll back
a seasonally adjusted 8.5% prevented lawmakers from Thursday that the economy their reopening efforts and
surge in May after spend- agreeing on an extension shrank at a dizzying 32.9% anxious consumers decide
ing had plunged the previ- of the benefits, thereby annual rate in the April- to stay at home rather than
ous two months when the threatening to squeeze mil- June quarter — by far the pursue normal economic
pandemic shuttered busi- lions of the unemployed. worst quarterly plunge on activities like shopping,
nesses, caused tens of mil- Doing so would weaken records going back to 1947 traveling and eating out.
lions of layoffs and sent the spending by consumers, — as the viral outbreak shut On Wednesday, Federal
economy into a recession. the primary driver of the down businesses, threw Reserve Chair Jerome Pow-
Now, with confirmed viral economy. tens of millions out of work ell warned that the viral
infections rising in a ma- What's more, recent pat- and sent unemployment epidemic was endanger-
jority of states, many busi- terns suggest that con- surging to 14.7%. ing any modest rebound —
nesses have had to pause sumers have reduced The economic contraction a key reason why the Fed
their re-openings or close a their spending in the past was driven by a deep pull- plans to keep interest rates
second time and cut jobs, couple of weeks. JPMor- back in consumer spend- pinned near zero well into
thereby putting consumers gan Chase, which tracks ing, which fell at a record the future.
under renewed pressure. total spending by its 30 mil- pace as travel froze up and Powell noted that as new
The number of laid-off lion debit and credit card shutdown orders forced confirmed cases have
Americans who have ap- holders, notes that as of many restaurants, bars, soared, measures of spend-
plied for unemployment July 20, their spending had entertainment venues and ing and hiring have slipped
benefits has topped 1 mil- dropped to a five-week other retailers to close. or plateaued at low levels.
lion for 19 straight weeks. low. So steep was the fall last Unemployed Americans
All told, roughly 30 million Spending levels remain quarter that most analysts have been receiving both
people are out of work, the about 12% below pre-pan- expect a sharp economic state unemployment aid
government says. demic levels, though up rebound for the current and $600 a week in ad-
Friday's Commerce De- from a 40% plunge in early July-September period. But ditional benefits from the
partment report showed April. the pain will likely continue federal government.
that the June increase in "While consumers felt more and potentially worsen in The federal aid has
consumer spending coin- at ease spending in June, the months ahead as the pumped nearly $20 billion
cided with a 1.1% drop in real-time data point to damage from the virus a week into the economy
personal incomes, which plateauing demand since deepens. and enabled many of the