Household spending subsided last month but appears to be really picking up again as consumers – armed with federal stimulus money and many of them were newly vaccinated – travel, eat out and return to malls.
The Commerce Department said on Friday that consumer spending – the biggest driver of economic activity in the United States – fell 1% in February. The decline was largely attributed by economists to the cold weather and snowstorms that struck most of the country, which have forced businesses to close and families to be kept indoors.
Family income – including Americans’ wages, investment returns, and government aid –I also fell, By 7.1%, although this decrease was also temporary. The federal government’s distribution of checks to most families as part of a $ 900 billion coronavirus relief package sent household income up 10.1% in the previous month, also contributing to the spending jump. Income returned to more normal levels in February.
Income and spending are set to pick up in the coming weeks, setting the economy for what economists expect will be the strongest growth in years after the contraction caused by the pandemic last year. Under The latest Covid-19 stimulus packageIt’s a $ 1.9 trillion plan President Biden signed in March, and the government has already He started handing in checks For families. While unemployment remains high, the relief package also provided $ 300 per week in enhanced compensation for unemployed workers. Meanwhile, millions of people are getting the vaccine every day.
This combination – rising income and more people shielded from the worst effects of the deadly virus – is expected to unleash a flurry of economic activity in the coming weeks. Private sector data on restaurant visits, hotel reservations and plane travel shows a steady rise in spending in recent weeks. In Texas, restaurant reservations rose rapidly after elected leaders lifted restrictions on companies. Reservations there recently exceeded 2019 levels.