Consumer Spending Jumps For A Second Month ... But

Consumer spending rose in May and June but is well below pre-COVID levels.

The BEA's Personal Income and Outlays report shows Personal Consumption Expenditures rose 5.6% in June and Real PCE rose 5.2%  

Key Points

  • Real PCE rose by $623.0 billion increase in June. This reflects an increase of $273.7 billion in spending for goods and a $362.1 billion increase in spending for services.
  • Within goods, the leading contributor to the increase was spending for clothing & footwear. 
  • Within services, the leading contributors to the increase were spending for health care as well as food services and accommodations. 
  • Personal saving was $3.37 trillion in June and the personal saving rate—personal saving as a percentage of disposable personal income—was 19.0 percent.
  • The PCE deflator (measure of inflation) for June was 0.4%. Excluding food and energy the PCE deflator was 0.2%.
  • The PCE deflator rose for 0.8% from June 2019. Excluding food and energy the PCE deflator rose 0.9% from a year ago.

PCE and Real PCE June 2020

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PCE and Real PCE June 2020

PCE and Real PCE 2007-Present

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PCE and Real PCE 2007-Present June

PCE and Real PCE vs February 2020 and June 2019

  • February PCE: 14,877.4 Billion
  • February Real PCE: 13,402.4 Billion
  • June PCE: 13,851.2 Billion
  • June Real PCE: 12,517.5 Billion
  • PCE Percent Change From February: -6.89%
  • Real PCE Percent Change From February: -6.60%
  • PCE Percent Change From June 2019: -4.83%
  • Real PCE Percent Change From June 2019: -5.54%

Trouble Brewing

Consumers can spend but income is about to dry up.

Over 30 Million People About to Lose Unemployment Benefits

As noted on Sunday the Clock Just Ran Out on $600 in Weekly Unemployment Benefits.

Roughly 30 million people are receiving some form of pandemic aid.

Cutback Details

  • The GOP proposes to cut the enhanced unemployment benefit from $600 to $200 per week through September. That is in addition to what recipients get from states unemployment insurance.
  • The GOP also proposes to set the maximum assistance at 70% of a worker’s previous wages, with a cap of $500 per week.
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