“U.S. households boosted spending by 1.4% in September, the fifth straight month of increases, as higher pay and remaining pandemic aid helped boost incomes,” WSJ writes.
People are making more, and therefore spending more. Personal income, which measures what households receive in “wages and salaries, government aid and investments,” was up 0.9% last month after sharply falling in August.
- “Economists surveyed by The Wall Street Journal expected a 1% increase in spending, and a 0.5% rise in personal income.”
The uptick in personal income represented increased compensation and “the affect of a federal supplement to state unemployment benefits that provides recipients with an extra $300 weekly.”
- Consumer spending boosted sales on autos, clothing, health care, fitness and entertainment services.
- U.S. GDP grew by a record 7.4% compared to Q2.
- Consumer spending aided the growth, jumping up 40.7% (at an annualized rate) in the third quarter.
- Initial jobless claims dropped by 40,000 to 751,000 for the week ending Oct.24.
What’s up with federal stimulus? Any economic relief package will likely wait until after the next week’s presidential election. Lawmakers and the Trump administration haven’t made much progress despite weeks of negotiating.
From Morning Cents (Oct. 9, 2020):
“I had talked about how we should expect a volatile, but relatively sideways market, which has been playing out as expected. Markets don’t like uncertainty, so it has liked new stimulus package negotiations and Biden’s increased lead in the polls. But for the market to make another meaningful move higher, we will need to see another stimulus package to support consumer spending and a weak job market.”