Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Incomes Fell in June as One-Time Stimulus Boost Faded

EconomyJul 31, 2020 14:36
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

(Bloomberg) -- U.S. incomes fell more than expected in June as the effects of the government’s one-time stimulus checks dissipated, though an increase in unemployment-insurance payments pointed to the importance of expiring federal relief.

Personal incomes declined 1.1% from the prior month, a Commerce Department report showed Friday. The median estimate in a Bloomberg survey of economists called for a 0.6% decline. Consumer spending increased 5.6% in June, after jumping by the most on record a month earlier.

While the income decline reflected the continued unwinding of April’s sharp gain from one-time stimulus, unemployment insurance payments actually increased in June by an annualized $111 billion -- likely reflecting states working through backlogs of applications, even though joblessness has declined. That increase, stemming mainly from the federal government’s supplemental $600 in weekly jobless benefits, highlights the importance of the payments that expire today, with Congress failing to reach an agreement on additional aid.

Wages and salaries rose 2.2%, reflecting rehiring as more businesses reopened across the country, though such compensation remained well below pre-pandemic levels.

The pace of the economic rebound appears to be cooling amid a resurgence in virus cases, and only 7.5 million of the 22 million jobs lost because of the pandemic had come back as of June. If re-hiring fails to come back quickly, a steep dropoff in the federal support for the jobless could have significant implications both for incomes and ultimately personal consumption, the lifeblood of the U.S. economy, in the coming months.

Even though consumer spending posted a record increase in May and rose again in June, the level of spending remains below pre-pandemic levels. A Commerce Department report out Thursday showed inflation-adjusted personal spending fell at a record 34.6% annualized rate in the second quarter, with outlays for services plummeting at a 43.5% pace.

Real spending climbed 5.2% in June after surging 8.4% a month earlier. The increase in outlays last month was broad-based, reflecting an 8.8% jump in durable goods and a 5% pickup in services.

The personal savings rate, which had surged to a record in April as a result of the rise in government social benefits, fell for a second month to 19% from 24.2%.

The gauge of consumer prices that the Federal Reserve officially uses for its target rose 0.8% in June from a year earlier, well below the central bank’s 2% goal. The core price index, which excludes more-volatile food and energy costs, increased 0.9%.

(Adds price indexes in last paragraph.)

©2020 Bloomberg L.P.

 

U.S. Incomes Fell in June as One-Time Stimulus Boost Faded
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email