Personal income decreased by 1.1% to $222.8 billion in June, while personal consumption expenditures increased by 5.6% to $737.7 billion, according to estimates released Friday by the Bureau of Economic Analysis.
What Happened: The decrease in personal income could be partly attributed to lower government social benefits as spending on these benefits decreased from May. Yet some sectors of the economy reopened ,allowing some increase in compensation to employers. Unemployment insurance benefits also increased in June.
Personal consumption expenditures in June reflected an increase of $273.7 billion in spending for goods and a $362.1-billion increase in spending for services. Personal saving topped $3.37 trillion in June, with the personal saving reported at 19%.
Why It’s Important: When looking at where expenditures are increasing, the leading contributor to the increase was spending for clothing and footwear, based on Census Bureau Monthly Retail Trade Survey data.
Spending on health care and food service and accommodations also increased.
“Spending by wealthy households has declined by 9.8% relative to January 2020. Spending by middle-income consumers has dropped by 5.3% and lower income consumers by 2.3%,” RSM Chief Economist Joe Brusuelas said in an email to Benzinga.
The numbers speak to a point of contention in Congress, with some lawmakers arguing that government transfers are amounting to more income than workers had while employed.
What’s Next: The $600 federal unemployment benefit ends Friday, and no legislation has been passed to continue it.
If the benefit disappears for good, expect income to drop even more and personal spending to drop more. While some economies are slowly reopening, there are still turbulent times ahead for many Americans.
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