Consumer spending leaped a record 8.2% in May to mark the first increase since the coronavirus pandemic drubbed the economy, but fading government stimulus payments, still-high unemployment and a fresh viral outbreak are likely to muzzle similarly large gains in the months ahead.
The increase in spending fell short of the 10% forecast of economists polled by MarketWatch.
The reopening of business activity in May in several states released a barrage of pentup demand as Americans were able to get out and about for the first time in several months.
What also allowed them to spend more were generous unemployment benefits, a federal loan program to encourage small businesses to keep paying workers, and onetime stimulus checks for most families.
Spending is unlikely to continue to increase rapidly as the summer wears on, though.
For one thing, incomes remained depressed with tens of millions of people still out of work. They sank 4.2% last month, reflecting mass unemployment and receding federal aid after a big flush of financial relief in April.
Another wave of coronavirus cases, what’s more, is causing some states to hit the pause button on reopening their economies and deterring people from leaving their homes.