by John Carney –
U.S. consumer spending and household incomes both rose more than expected in September, helping the economy recover from the pandemic induced downturn faster than expected.
The Commerce Department said Friday that household spending on goods and services rose 1.4 percent last month on a seasonally adjusted annualized basis, the fifth consecutive monthly increase. Economists had expected spending would rise by 1 percent, repeating August’s gain.
Household incomes rose nine-tenths of a percent, boosted by higher wages in the private sector. Economists had expected income to rise by a milder three-tenths.
The government’s contribution to the economy fell, making the rise in income even more surprising. Government wages and salaries fell half a percentage point. Unemployment insurance payments fell 42 percent compared with August as the federal enhancement to jobless benefits was reduced and many Americans returned to work. Unemployment insurance payments are down 72 percent since their peak in June.
Overall private sector wages and salaries rose by a little more than one percent. Compared with February, prior to the pandemic’s impact on the economy, wages are down 3 percent. Compared with April, when lockdowns were at their tightet, they are up 10 percent.
Wages and salaries in the services sector rose 1.2 percent. These still remain 2.7 percent below their pre-pandemic February level. But compared with the depths of the lockdown, they are up 10.2 percent.
Wages in goods producing jobs rose two-tenths. They are down 4.4 percent from February’s level and up 10.9 percent compared with April’s. … ||30 Oct 202028