Following a weeks-long dry spell in spending, the U.S. saw consumers increase their spending by a record 8.2% in May, partly erasing huge plunges the previous two months, according to reporting by the Associated Press.
The consumer spending rebound followed record spending drops of 6.6% in March and 12.6% after thousands of businesses closed their doors due to COVID-19.
Shutdown across the nation forced millions of layoffs, sending the economy into a recession. Recently, many businesses have decided to open their doors again, bringing back some stability to the job and spending market.
Friday’s Commerce Department report showed that Americans stepped up their spending in May despite a 4.2% decline in personal income, which had soared by 10.8% the previous month, reports the Associated Press.
Billions of dollars in unemployment aid and stimulus checks resulted in an income increase in April. By May, those stimulus checks were no longer counted as income for most people.
While unemployment aid states continue to pay for around 30 million jobless Americans, the federal government is providing $600 a week in additional benefits, reports the Associated Press. The federal money has pumped nearly $20 billion a week into the economy and enabled many of the unemployed to stay afloat.
Government weekly aid currently being provided is expected to end in July, making it unclear if consumers will continue to spend as much as they have over the last few weeks.
Increased daily numbers of new COVID-19 cases are also raising questions about spending.
Last month’s rise in consumer spending coincides with a sudden surge in coronavirus cases that’s forcing states and businesses to consider scaling back or even reversing the re-openings, according to the Associated Press.
Should another wave of COVID-19 occur, some businesses are considering another round of closings, which would reverse any rebound in spending.
However, one piece of positive data comes from numbers compiled from Chase Bank credit and debit cards, reports the Associated Press, which shows that consumers have gradually but consistently increased their spending since the government distributed the stimulus checks in mid-April.