US household spending falls, while stimulus boosts incomes

[WASHINGTON] US household spending fell for a second-straight time in December and incomes rose with more pandemic relief late in the month, highlighting how Covid-19 continues to impact consumers.

Purchases decreased 0.2 per cent from the prior month, following a downwardly revised 0.7 per cent decline in November, a Commerce Department report showed Friday. That compared with estimates for a 0.4 per cent drop. Personal incomes rose 0.6 per cent, stronger than the 0.1 per cent gain projected.

Some states and cities reimposed restrictions on businesses and activity, leading to nearly half a million job losses in the leisure and hospitality sector and restraining spending.

Personal incomes already received a boost from the passage of the US$900 billion pandemic relief package in late December. The bill included an additional round of stimulus payments and an extra US$300-a-week in supplemental jobless benefits. Additional income should help bolster spending going forward.

The Commerce Department said the increase in December income partly reflected an increase in pandemic unemployment compensation, the supplemental weekly payment for the jobless.

BLOOMBERG