This post was originally published on this site
The numbers: Freed from most Covid restrictions Americans spent liberally in June on travel, vacations and other services they shunned during the pandemic.
Consumer spending rose a sturdy 1% last month, the government said Friday.
The increase in spending was no surprise. On Thursday, the government said consumer outlays surged almost 12% in June to underpin a strong economic recovery.
Read: U.S. economy tops pre-COVID level as GDP surges at 6.5% pace
Even though federal stimulus payments have dried up, households have plenty of savings to underwrite an increase spending. The savings rate slipped to 9.4% in June from 10.3% in the prior month, but it’s still well above pre-pandemic levels.
Millions of Americans have also gone back to work this year and are earning paychecks again.
Personal incomes , meanwhile, edged up 0.1% in June. Incomes were held down in part by the end of stimulus payments.
Economists polled by The Wall Street Journal had forecast a 0.6% increase in consumer spending last month. Incomes were expected to decline 0.4%.
Big picture: The U.S. economy has made up a lot of lost ground in 2021. Gross domestic product surged 6.5% in the second quarter, leaving the economy larger than it was before the pandemic.
Consumer spending, the main driver of the U.S. economy, has led the way. Household spending generates more than two-thirds of U.S. economic activity.
Although they no longer have stimulus payments to fall back on, most households are in surprisingly decent shape more than a year after the onset of the pandemic.
So long as the delta Covid strain is contained, coronavirus cases stay low and more people go back to work, the U.S. economy should grow at a rapid pace through the end of the year, economists say.
Read: Jobless claims retreat from two-month high in sign delta hasn’t hurt much
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to open lower in Friday trades.
