Consumer spending numbers for January came out Friday, a mere 0.2% bump in January. That’s the month when the coronavirus headlines started coming. Incomes did jump upward, however — 0.6%, the biggest gain in nearly a year.
Consumers have been responsible for a lot of the recent economic growth. But now we’re dealing with a global health concern.
Consumer spending makes up about 70% of the U.S. economy, so any disruption would have dire effects on growth. But Jack Kleinhenz, chief economist at the National Retail Federation, says consumers are still in a good place right now.
He said Americans are saving at almost 8%, up from about 6% in 2009. And when people save, they also may be spending.
“Their income has exceeded their consumption in the last few quarters, which leaves a net benefit of saving,” Kleinhenz said. He added that low interest rates are also driving people to buy homes and refinance their mortgages.
But January’s report may not reflect consumer spending in the wake of COVID-19 which, said Matthew Luzzetti, chief U.S. economist at Deutsche Bank, is the real wild card right now.
“With a pretty resilient labor market, you would think that the consumer outlook remains sturdy, except for these worries about the impact of the coronavirus,” Luzzetti said.
He said spending on things like eating out, concerts, live sporting events and other entertainment could be the first to suffer — even without a broad outbreak in the United States.
COVID-19 Economy FAQs
It’s still the question on everyone’s minds: What’s going on with extra COVID-19 unemployment benefits?
The $600-a-week payments have ended, officially, as of July 31. For now, there is no additional federal pandemic unemployment assistance. House Democrats want to renew the $600 payments. Senate Republicans have proposed giving the unemployed 70% of their most recent salary by this October, when state unemployment offices have had time to reconfigure their computer systems to do those calculations. Until then, jobless workers would just get another $200. But, nothing has been agreed upon yet.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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