Over the course of last month, consumers within the United States held back on their spending. Some experts have connected this lack of spending to the government cut extended unemployment benefits for millions of consumers. Interestingly, core retail sales fell 0.1% this past month as opposed to a 0.9% increase in July. This is significant because these sales correspond closely with "consumer spending component of gross domestic product." Moreover, even though overall retail sales increased by 0.6%, this was due to higher gasoline prices supported receipts at gas stations.
My thought is do you think this is a result of an economic insecurity as people could possibly become increasingly concerned about their job security/income as this pandemic drags on? Or could this just be a outlier month and September will align more with July?
https://www.cnbc.com/2020/09/16/us-retail-sales-august-2020.html
7 comments:
Something important to note about the decrease in U.S consumer spending for the month of August is that the FED has been trying to incentivize consumer spending. This evidently shows that the measures they have taken so far, such as keeping interest rates low and letting inflation rise, have not been panning out as expected. I would have to argue that this has been caused by, as you mentioned, economic insecurity and consumer uncertainty has to what is going to happen within the next few months. If this trend were to continue over the following months, I would feel as if the FED should start becoming concerned about consumer saving during a period of low interest rates, and what they can do to give consumers a sense of relative safety.
I agree with what Joe had to say as well as the premise that decreased unemployment benefits adding to this decrease in spending. For many out of work the unemployment benefits were what they were living off of, and with those decreasing, their ability to consume goes with it. This trend could level off as more workers are able to get back to work, though I would expect that to take some time. With the craziness of this unprecedented pandemic, many economic factors may not recover until people feel safe again in society.
I agree with both of you completely in the sense that the FED will soon have to address this problem as their efforts of lowering interest rates have really not helped consumer spending. In reality, the benefits were to truly what people had to spend, and now that they are reduced people won't spend like they were doing previously. As time passes there is going to be further uncertainty for consumers within the next few months as the aftermath of this pandemic is just starting to show its early stages. We should also not forget that the pandemic is alive and well and we can't truly tell what devastating impacts it will leave on the economy.
at the end of the day there is only so much that we can do to avoid an recession and if it bound to happen then there is not much else we can do that we have not already tried. What i am more interested in, is what will the impact of us spending all this money to stimulate the economy be.
I think it ultimately comes down to consumer uncertainty and it is going to continue to be an economic roller coaster at least for the remainder of 2020. Like Joe had mentioned, the FED’s attempt to increase consumer spending isn’t working as well as they had planned. I think people are worried about possibly losing their job or having something just unexpected happen. It could also be the fact that people just don’t want to go out to the store or go to restaurants as much and be exposed to a lot of people. I feel that the FED should be concerned. What else can the FED do to correct this?
I feel like this may be due to the the wave of new coronavirus cases which has swept the U.S. during July, which leads to your point that the people are really concerned about their job security and making people not to got out and spend money as their spending confidence is being affected by the virus. At the end FED has to come out with a way to at a level where it can boost the consumer spending confidence.
I agree with everyone else, that this is due to coronavirus and economic uncertainty that comes with it. Many people are still not going out and consuming as much as they used to and with the next wave mentioned above, many people will continue to not spend for what I believe to be months ahead.
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