Economy

US Personal Income Down, Spending Up In June

consumer spending

Disposable personal income fell by 1.4 percent in June to $255 billion while personal spending increased $738 billion, a nearly 6 percent rise, according to the Bureau of Economic Analysis, an agency of the U.S Department of Commerce.

“The June estimate for personal income and outlays was impacted by the response to the spread of COVID-19,” the agency said in a statement on Friday (July 31).

One reason for the income dip, the Bureau said, was that federal economic recovery payments were at a lower level last month compared to May.

“Partially offsetting the decrease in other government social benefits were increases in compensation of employees and proprietors’ income as portions of the economy continued to reopen in June,” the report said.

The $623 billion increase in consumer spending in June reflected an increase of $274  billion for the purchase in of goods and a $362 billion increase in spending for services.

The leading contributor was an increase in spending for clothing and footwear, according to the U.S. Census Bureau Monthly Retail Trade Survey data.

On the service side, there were increases in healthcare, food services and accommodations spending.

On Thursday (July 30), the Bureau reported the nation’s gross domestic product (GDP), the value of goods and services produced in the country, fell at an annual rate of nearly 33 percent from April to June, the worst since the Great Depression.

Analysts said that is the biggest drop since the government started tracking the figures in 1947. In the first quarter (Q1), the Bureau reported GDP decreased 5 percent.

“The scale and unprecedented nature of the COVID-19-driven downturn will leave lingering scars during the recovery,” Bloomberg economists Yelena Shulyatyeva and Eliza Winger said in a commentary.

The U.S. Census Bureau reported June saw total retail sales rise to $524 billion, up 7.5 percent from $488 billion in May. Total sales even went up by 1.1 percent in June compared to the same month the previous year. Clothing in particular saw a big rebound last month. Even big-ticket items made it to shoppers’ lists, as sales of motor vehicles, furniture, clothing and electronics  increased.

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