As Spring stimulus fades, we see the changes of the COVID World taking shape

A few quick hits from last week's Income and Spending report for August.

The top lines were indicative of consumer spending continuing to climb its way out of the COVID-induced hole, and incomes continuing to fall back towards normal due to the end of COVID-related stimulus.

Personal income decreased $543.5 billion(2.7 percent)in August, according to estimates released today by the Bureau of Economic Analysis(tables 3 and 5). Disposable personal income(DPI) decreased $570.9 billion (3.2 percent) and personal consumption expenditures(PCE) increased $141.1 billion (1.0 percent).

On the income side, if you look at the supplemental report that includes the stimulus measures that started as the COVID recession hit the economy, you can see where they were phasing down as the Summer went on.

I'll also note that wages and salaries still have yet to regain more than 1/3 of their losses, and are still down $377 billion compared to February. So there's still quite a bit that still has yet to come back, which is reflective of an economy that has some sectors that are still well below the levels they were before the pandemic started to break out.

The big picture: Job losses by industry
(from @andrewvandam)

Food & hospitality: -19.2% down from Feb.
Mining: -13.2%
Education: -8.2%
Biz: -6%
Transport: -5.2%
Manufacturing: -4.7%
Healthcare: -4.4%
Construction: -4.3%
Gov't: -4.1%
Retail: -2.6%
Finance: -1.6%
Utilities: -0.8% pic.twitter.com/YAUHcQKZqA

— Heather Long (@byHeatherLong) October 2, 2020

The spending side also indicates this bifrucation, where the goods sector is actually seeing spending go up, while services are suffering badly.

Spending on services is rising as businesses reopen, but remains extremely depressed. Spending on goods has stalled out but at an elevated level compared to before the pandemic. pic.twitter.com/deRQp872QX

— Ben Casselman (@bencasselman) October 1, 2020

Like a lot of things, you can see where the COVID World has developed a new baseline of economic activity for a lot of areas. And as the weather gets colder and job growth slows down, we will see if these changes start to ripple their way through and multiply these effects. Especially if no more stimulus is coming from DC for the rest of 2020.