Consumer Spending Gains Slows To 1% In August

The 2.7% drop in incomes reflected a huge 14.8% decline in the category that covers government payments including unemployment benefits. Democrats and Republicans have been unable to restore the expired benefits because of wide differences between the two sides on how much additional support to provide.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin held talks Wednesday about a massive COVID-19 rescue package, meeting face to face for the first time in more than a month in a last-ditch effort to seal a tentative accord on an additional round of coronavirus relief.

At issue is a long-delayed package that would extend another round of $1,200 direct stimulus payments, restore bonus pandemic jobless benefits, speed aid to schools and extend assistance to airlines, restaurants and other struggling businesses. A landmark $2 trillion relief bill in March passed with sweeping support and is credited with helping the economy through the spring and summer.

The 1% rise in consumer spending was driven by a 1.4% gain in spending on services with big gains coming for spending on food services and hotel and motel accommodations, two areas that were hit hard during the lockdowns. Spending on goods durable goods such as autos was up 0.9% in August while spending on nondurable goods such as food and clothing fell 0.1%.