- Household spending in the United States falls for the first time since the start of the COVID-19 pandemic
- Spending has generally increased even as household income has trended downward following an infusion of cash from the CARES Act
- Data reflects diminished buying power as well as fewer opportunities for spending as COVID-19 prompts business restrictions in many parts of the country
Household spending in the United States fell for the first time since the start of the COVID-19 pandemic in November, as personal income decreased and new business restrictions limited opportunities for purchases.
According to Commerce Department data, household spending was down 0.4 percent from October. The last decline occurred in April, when lockdowns prompted by the pandemic caused household spending to plummet 12.7 percent.
Personal income fell 1.1 percent in November, following a 0.6 percent drop in October and 0.8 percent increase in September. The trend reflects both a slowdown in the nation’s economic recovery as well as the dwindling effect of government assistance programs.
In the early months of the pandemic, household income rose sharply as the CARES Act provided direct stimulus to American households as well as supplemental unemployment benefits. Income has been trending downward since that time while spending, while spending has generally seen a steady increase.
While economists expect robust GDP growth in the fourth quarter of 2020, consumers have largely cut back on their spending. This is likely a result of elevated unemployment levels, reduced buying power, and fewer options for spending as a surge in new COVID-19 infections triggers new business restrictions in many areas. Economists generally expect a stronger recovery in 2021 as COVID-19 vaccines are widely distributed.
