Following up on the GDP report from earlier in the week,
June's income and spending figures came out, which reiterated that American consumers got out and spent more as Q2 ended, but what they were buying was costing more.
Americans spent more than expected in June as they got outdoors and traveled more, but they’re paying higher prices.
The Commerce Department said Friday consumer spending rebounded 1% last month from a 0.1% dip in May. Household expenditures accounts for two-thirds of U.S. economic activity, and that robust spending helped boost economic growth 6.5% in the latest quarter....
But as demand outpaces supply, inflation is heating up. The core personal consumption expenditures index shot up at an annual rate of 3.5%. It’s speeding up faster than the Federal Reserve’s target of 2%. But Fed Chair Jerome Powell insists inflation is temporary.
Within those June spending figures, we also got more data indicating consumers were spending their dollars to go out and get services, particularly from bars, restaurants and hotels.
But at the same time, Americans moved away from buying goods after getting a lot of them in the first year of the COVID World. And that's especially true for automobiles, which have had
significant part shortages and recent plant shutdowns in America.
On the income side, we also saw evidence of a return to a post-COVID normal within a small 0.1% increase for June. Income growth has gone down in some areas, as most Americans have already received their 2021 stimulus checks, and fewer people are receiving enhanced unemployment checks (both due to fewer claims overall, and due to some red states ending the benefit).
But the correlated improvement in the jobs market has made up for it, and along with higher wages in many sectors, it means that post-COVID wage growth has finally exceeded the jump in unemployment benefits.
Let's see if the resurgence of COVID starts to slow down the increased spending and wage growth. My guess is that it won't show up in July's numbers (especially in these parts), but if we don't get a handle on the Delta variant, I have to wonder how common a scene like this will be come September.
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