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US consumers saw their personal income and expenses rise 1.1% and 0.3% respectively in July, the Department of Commerce said today. This despite the looming economic uncertainty paired with a reluctance due to the pandemic.
On the contrary, states that ended unemployment benefits prematurely saw spending fall by $ 2 billion
Find: U.S. Creates 943,000 Jobs In July, Brings Unemployment Down To 5.4%
“The July personal income and expenses estimate reflected continued economic recovery, facility reopenings and government response to the COVID-19 pandemic,” the press release said.
The increase in July was primarily due to increases in government benefits, such as the new American Rescue Plan upfront child tax credit, as well as employee compensation. The increase in remuneration occurred mainly in private wages and salaries.
Related: ADP reports that private business employment growth has fallen well below July’s estimates
Americans decided in July to spend more on services than goods. A $ 102.6 billion increase in service-related spending was widespread across all categories, with catering and accommodation topping the list. For goods, a decline of $ 60.4 billion was widespread across most spending categories, led by automobiles and parts, recreational items and vehicles, and clothing and footwear. These decreases were partially offset by increases in gasoline and other energy goods.
According to the press release, personal savings in July were $ 1.72 trillion and the personal savings rate – calculated as a percentage of disposable personal income – was 9.6%.
Inflation comes hot: consumer price index shows that food and gas prices rose again in July
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“Spending will continue to be at the fore in the months ahead as the surge in cases and hospital admissions continues to threaten the most vulnerable sector of the economy,” writes TD economist Maria Solovieva, CFA. “The proliferation of the Delta variant could still hurt the economy: Consumers might hesitate to spend on still-depressed high-touch services while workers on the edge feel less compelled to look for work.”
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Last updated: August 27, 2021
About the author
Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but now lives in Ohio, where she attended Ohio State University and lives with her two young children and her fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.