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US consumer spending sinks by record 13.6% in face of virus

SeattlePI.com Friday, 29 May 2020
WASHINGTON (AP) — U.S. consumer spending plunged by a record-shattering 13.6% in April as the viral pandemic shuttered businesses, forced millions of layoffs and sent the economy into a deep recession.

Last month's spending decline was far worse than the revised 6.9% drop in March, which itself had set a record for the steepest one-month fall in records dating to 1959. Friday's Commerce Department figures reinforced evidence that the economy is gripped by the worst downturn in decades, with consumers unable or too anxious to spend much.

Even with employers cutting millions of jobs during the month, personal incomes soared 10.5% in April, reflecting billions of dollars in support through government payments in the form of unemployment benefits and stimulus checks.

The depth of the spending drop is particularly damaging because consumer spending is the primary driver of the economy, accounting for about 70% of economic activity. Last month’s figure signaled that the April-June quarter will be especially grim, with the economy thought to be shrinking at an annual rate near 40%. That would be, by far, the worst quarterly contraction on record.

Friday's report showed sharp declines in consumer spending across the board — from durable goods like cars to non-durable items such as clothing and services ranging from doctor visits to haircuts.

In April, the nation's jobless rate was 14.7%, the highest since the Great Depression, and many economists think it will top 20% for May. States are gradually restarting their economies by letting some businesses reopen with certain restrictions, and some laid-off employees are being recalled to work. Still, the job market remains severely depressed, and the outlook for the rest of the year is still bleak.

Some financial support for the tens of millions of consumers who have been...
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News video: US Consumer Spending Plunged by a Record 13.6 Percent in April

US Consumer Spending Plunged by a Record 13.6 Percent in April 00:58

Consumer spending data was released by the Bureau of Economic Analysis (BEA) on Friday.

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