Consumer spending continues to climb a wall of worry. That appears to be the case as the Commerce Dept.’s latest monthly numbers are released. The climbing part shows a 0.5% gain in personal consumption expenditures from September to October. The worry part comes from a decline in household income and increased jobless claims.
Continued concern about Covid-19 and travel restrictions aren’t helping either, even though three positive vaccine announcements in the last few weeks reveal a light at the end of the tunnel. We are entering the pivotal holiday shopping season with the start of Black Friday and there are contrasting scenarios. In-store shopping will be down while e-commerce shopping will continue on a torrid pace and probably save the day for most merchants.
The following excerpt from a Wall St. Journal article reports more on the topic:
Americans’ spending rose briskly in October while their income fell sharply, adding to other mixed signals about the strength of the economic recovery. Consumer spending rose 0.5%, the sixth straight monthly increase, the Commerce Department said Wednesday. However, the gain was the smallest over that stretch.
Household income—which includes wages, investment returns and government payments—fell 0.7% last month, in part because of the fading effects of government aid programs. The drop could weigh on consumer spending in the months ahead.
Consumer spending has been strong enough to help fuel economic growth since the sharp recession this past spring, when the coronavirus pandemic forced millions of businesses, schools and government agencies across the U.S. to shut down or limit their activities. Consumer spending represents more than two-thirds of economic activity in the U.S.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group