American consumers increased their spending by a record 8.2 percent, according to a report from Associated Press.
A Commerce Department report released on June 26 showed Americans stepped up their spending in May despite a 4.2 percent decline in personal income, which had soared by 10.8 percent the previous month. Income had jumped in April on the strength of billions of dollars in support through government payments in the form of unemployment aid as well as one-time $1,200 stimulus checks.
In May, those stimulus checks were no longer counted as income for most people.
Besides the unemployment aid states are providing to the 30 million jobless Americans, the federal government is providing $600 a week in additional benefits.
Key Points
- The federal money has pumped nearly $20 billion a week into the economy and enabled many of the unemployed to stay afloat.
- However, the $600 a week in aid will expire after July, and Trump administration officials have said they oppose an extension.
- Without the stimulus checks or an extension of unemployment aid, it’s unclear whether consumers will keep spending freely.
- The government is being urged to extend unemployment benefits beyond the typical six-month period.
- Despite optimism as retail reopens, there’s been a serious backlash as some states have started to shut down again in response to a spike in coronavirus cases.
