Consumer spending rebounded in May, but incomes declined
U.S. consumer spending increased by a record in May as Americans spent government payments and increasingly visit reopened stores and restaurants.
Household outlays rose 8.2% from April, the largest increase in more than 60 years of data, though the increase comes after a record decrease in April, and the total level of spending remains below the pre-pandemic level.
A Commerce Department report released on Friday showed that while spending is rebounding, incomes dropped by 4.2% in May, just shy of a record decrease. April had seen a record increase for incomes, driven largely by government relief payments including the $1,200 distribution to over a hundred million Americans.
Wages and salaries rose 2.7% in May from the prior month, the largest increase since 1993, reflecting modest rehiring as businesses reopened across the country. That followed a record 7.6% drop in April.
The main drivers of the monthly increase in spending were outlays on autos, health care and restaurants, along with clothing, fuel, televisions and computers. Bicycles, recreational vehicles and boats also contributed to the gain, benefiting from shifts in consumer demand.
The majority of adults have used their stimulus check or plan to use it on household expenses like food, housing and utilities, according to a Census Bureau survey. That compares with about 14% of adults who said they planned to mostly save the funds.
The personal savings rate, which had surged to a record 32.2% in April as a result of the rise in government social benefits, fell to 23.2% -- still almost triple February’s 8.4%.