US consumer spending rose by 1.9% in July, according to the latest figures from the Commerce Department.
The increase in US consumer spending appeared as a support for a struggling economy that was badly hit by the coronavirus pandemic and left 27 million unemployed.
While the July gain has been the third straight monthly increase in consumer spending, it indicated a slowdown from the previous two months. Consumer spending is regarded as the primary driver of the US economy.
Meanwhile, Friday’s report from the Commerce Department revealed that income increased by 0.4% in July after two months of declines. The US economy is currently bombarded with high unemployment, struggling businesses, the health crisis, and lack of complete confidence in spending and hiring.
The consumer spending increase also comes weeks after the $600-a-week federal unemployment benefit expired.
The economy is believed to be expanding again as home and auto sales continued to be strong. Stock prices also had record highs.
The industries severely hit by the coronavirus pandemic are those involved with travel, tourism, and entertainment. The US government said that around 1 million people applied for unemployment benefits last week.
According to the Conference Board, a business research group, consumer confidence fell to its lowest level since 2014. In survey results published by the National Association for Business Economics, two-thirds of economists claimed that the economy remains in recession. Almost half said they did not expect it to return to pre-pandemic levels until mid-2022.
What consumers are buying
What consumers are concerned about as coronavirus pandemic persists has changed, based on the latest Global State of the Consumer Tracker by Deloitte.
While consumers are starting to cope with health issues and anxiety, their financial worries remain abundant, which will affect industries such as the automotive market.
The Global State of the Consumer Tracker reveals important shifts in sentiment and spending goals since the COVID-19 peak in April.
The auto retail market suffered from low demand due to self-isolation measures for an extended period of time. Financial issues may become a huge factor of how people will be interested in the automotive sector.
Health concerns can also affect one’s choice between owning a vehicle and using alternative transportation modes in the near future.
Personal health remains the top concern of less than half of US consumers (48%). However, this is a decline from 57% measured during the peak in early April.
In addition, people are considering their use of public transit (60%) and ride-hailing services (57%) over the next three months.
For millennials, their immediate financial concerns rise, as 36% of 18- to 35-year-olds are worried about making upcoming car payments. They also fear losing their jobs, with 37% of US consumers concerned about unemployment.
Going to the store appears safe now, according to more consumers (42%), an increase from 30% in April.
Moreover, the number of consumers who plan to buy online is gradually declining, particularly in restaurants. However, this trend is similar in categories like apparel and electronics.
In early April, almost half (47%) of US consumers intend to order from and pay restaurants digitally in the coming month. However, the figure went lower to 39%.
Results also showed that 52% of consumers plan to remain loyal to the brand names they trust.
