Concerns that falling incomes were destined to manifest in slower spending were realized in November, data out Wednesday showed (or maybe “confirmed again” is more apt).
Personal income dropped far more than expected last month, falling 1.1%, versus estimates of a 0.3% decline. That comes on the heels of a revised 0.6% drop in October.
The government cited “a decline in Paycheck Protection Program loans to businesses” as well as another drop in emergency wage assistance. Additionally, farm proprietors’ income “reflected a decrease in payments under the Coronavirus Food Assistance Program,” the BEA said.
Personal spending fell as well, and by double the amount markets expected. The 0.4% drop was accompanied by a downward revision to October’s figure, which fell to +0.3% from the initially reported 0.5% rise.
This comes a week after retail sales data for November disappointed expectations, and again suggests that the rolling off of social benefits is weighing on American families and, in turn, on consumption.
Notably, it was goods consumption that suffered last month, with an emphasis on spending for clothing, footwear, and cars. “An offset was an increase in spending for food and beverages purchased for offpremises consumption,” the BEA said.
All in all, this is just more evidence that the US economy is decelerating, and underscores the need for… I don’t know, maybe $2,000 checks instead of $600 checks, as Donald Trump abruptly decided to demand on Tuesday night.
Inflation was tame in November, in case you were curious. Headline and core were both unchanged MoM.
Separately, the latest read on jobless claims suggested the situation remains acute, even as the headline print was better than forecast.
I guess maybe we aren’t “moving out of the recession” after all. Now that Mitch has moved from head of the white list to the now disloyal enemy number one for the White House, the next steps will be interesting.
It’s crazy how CNN has “experts” on to say that Americans don’t need stimulus checks. They say we will all just save the money and it will overheat the economy. You’ve shown here that people NEED these checks. Good work