US consumer spending spiked a record 8.2% in May as personal incomes fell

couple buying a car

US personal consumption expenditures jumped 8.2% in May following a record drop in April, according to a Friday report from the Commerce Department.
Also in May, personal income declined 4.2%, the result of a decrease in government social benefits.
Spending in vehicles, healthcare, and restaurants drove jumps in both goods and services.
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US consumer spending posted its biggest jump on record in May as Americans took advantage of economic reopenings to spend government stimulus checks and other benefits. Still, consumption remains below pre-coronavirus levels.

Personal consumption expenditures increased 8.2% in May, according to a Friday report from the Commerce Department. The leap follows the biggest drop ever in April as consumers closed their wallets amid pandemic lockdowns.

Also in May, personal income declined 4.2%, according to the report. The drop — following a record spike in the previous month — “primarily reflected a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in April,” according to the report.

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Spending in goods and services both contributed to the $892.6 billion increase in consumer spending in May. The leading contributor to the $590.4 billion jump in goods was spending on motor vehicles and parts, recreational goods, and vehicles.

The $363.8 billion increase in services spending was led by healthcare, as well as food services and accommodations.

The personal savings rate, which surged in April, was 23.2% in May. The rate is personal savings as a percentage of disposable income.

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Source:: Business Insider


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