Household income surged a record 21.1% in March as stimulus measures hit bank accounts and boosted consumer spending.
Pooja Sriram, US economist at Barclays, said: “In fact, that’s an important aspect of ensuring that this recovery continues.”
According to data analytics firm Earnest Research, the stimulus payments included in the latest package have spent most of the pandemic stimulus checks in all three rounds.
Those who received the incentive boosted total spending growth by 29 percentage points in mid-March compared to the same period in 2019, Ernest’s trading figures show. This exceeded the bumps of 23 and 22 points, respectively, after the first and second stimulus checks.
Ernest’s director of data analysis, Zack Amsel, said the spending effect was greater as the checks were larger and in line with the economic resumption. According to Ernest, spending among stimulated people increased twice as fast in Pennsylvania, Texas and Florida compared to California and New York. This reflects a stronger stimulating effect in the states that resumed earlier.
“The local economy is important,” said Amsel. “In Texas and Florida, if the restrictions weren’t as strict as New York and California, I’ve seen them run since April last year.”
Private consumption is the biggest factor behind US economic growth. Consumption is growing steadily across the pandemic as consumers increase their purchases of commodities such as automobiles, home appliances and furniture. Spending on face-to-face services such as restaurants, nail salons and air travel has been hit hard, but is increasing as people are vaccinated.
Robert Bornfriend, 76, has traveled abroad about twice a year for the past 10 years. When the pandemic broke out, residents of Wheaton, Illinois, stayed home for months, avoiding traveling and eating out.
This year is taking on a different shape. Now fully vaccinated, Bourne Friend recently went to a restaurant for the first time during a pandemic to eat a trio of shrimp, skirt steak and lamb tacos.
He also flew to Costa Rica earlier this month and is looking forward to a group tour of Sicily later this year. When he booked a river cruise through the Netherlands and Belgium, Mr. Bournefriend chose a treat: a hut on the ground floor deck.
“I want to go a little more luxury to visit more places, upgrade my accommodation and have more fun,” he said. “I feel like I’ve lost a significant percentage of my remaining life. I want to make up for that.”
As the economy resumes in the coming months, households are ready to spend much of their savings during the pandemic. According to Moody’s Analytics, excess savings, the extra amount that many Americans have hidden since the outbreak of the virus, accounts for about 12% of US gross domestic product.
Wealthy households, who were less unemployed during the pandemic, ran out of most of their savings during the pandemic. Many economists tend to treat savings as wealth rather than income than low-income households, but many economists expect to spend this year generously to make up for being at home for months. I will.
Strong consumer spending is one factor that is likely to boost inflation in the short term. Companies may raise prices as demand surges outpace employment and production capacity.
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Federal Reserve Board Chair Jerome Powell said at a press conference Wednesday that price pressures from the resumption process are likely to be temporary.
“Episode of temporary price increases as the economy resumes is not the same as, and unlikely, a sustained year-on-year increase in inflation,” Powell said. “Sure, it’s the Fed’s job to prevent that from happening.”
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US household income surged record 21.1% in March
Source link US household income surged record 21.1% in March