WASHINGTON (AP) — U.S. consumers increased their spending by 1.9% last month, a dose of support for an economy struggling to emerge from the grip of a pandemic that has held back a recovery and kept roughly 27 million people jobless.
The July gain marked the third straight monthly increase in consumer spending, the primary driver of the U.S. economy, but represented a slowdown from the previous two months. Friday's report from the Commerce Department also showed that income rose 0.4% in July after two months of declines.
The consumer spending report arrives amid a hazy economic landscape, with high unemployment, struggling businesses and deep uncertainty about when the health crisis will be solved and when people and companies will feel confident enough to spend and hire normally again. It also comes weeks after the expiration of a $600-a-week federal unemployment benefit deprived millions of a key source of income and dimmed the outlook for consumer spending.
Real-time tracking data from JPMorgan Chase shows that credit and debit card spending had softened by early this month in states with high unemployment compared with states with lower unemployment. But Chase economists said they saw little sign that the expiration of the $600 benefit has so far caused any major economic setback. Chase said its tracker of growth in spending by 30 million Chase card holders compared with a year ago had actually risen slightly since the $600 benefit expired late last month.
But economists have warned of more severe consequences if Congress fails to resolve a political impasse and reinstate federal unemployment benefits.
“The steep decline in federal support for unemployed workers and heightened uncertainty will depress consumer confidence and spending and weigh on the broader economic recovery,” said Lydia Boussour, senior...
