U.S. Consumer Spending Sees Biggest Drop in 10 Months
March 26, 2021
U.S. consumer spending fell precipitously in February as harsh winter weather kept shoppers at home and the impact of the second round of stimulus checks faded.
Consumer spending was down 1.0% for the month, following a 3.4% increase in January, according to the Commerce Department. This is the largest drop since April 2020, when most of the nation was still in a strict lockdown for non-essential businesses. Personal income also fell by 7.1%, following January’s 10.1% surge, propelled by stimulus checks.
Consumer spending accounts for two-thirds of the nation’s GDP, so a sustained decline would hurt growth. Luckily, however, the drop is expected to be temporary. The accelerating vaccine rollout and the massive $1.9 trillion stimulus package, which includes direct checks of $1,400 and enhanced unemployment benefits, are expected to drive a strong rebound in March.