American consumers spent 1.9 percent more in September than in August, more than double the rate analysts were expecting.
Clothing and department stores saw sales rise 11 percent, some of which analysts attribute to back-to-school purchases. Sales of health and beauty products, seen as non-essential during the shutdown, were up 1.5 percent.
Grocery sales were flat; gasoline sales edged up, indicating that people are becoming more mobile.
It was the fifth consecutive month that spending has risen, with consumers spending on furniture, sporting goods, and home improvements.
Sales of motor vehicles, which make up about 20 percent of consumer spending, gained 3.6 percent in September. The gain may be due to people shunning public transport while COVID fear still abounds, analysts said.
Millions of workers in the face-to-face economy are unemployed and struggling to pay rent and buy food.
In contrast, people who can work remotely have seen their incomes hold steady while record low interest rates make it easier to buy cars and appliances.
No Fed Money, No Spending
With the inflow of trillions of cheap money pumped into the system, unemployed persons doubled their savings as federal $1,200 stimulus checks and $600 weekly unemployment payments came in, a study by the University of Chicago and JPMorgan Chase found.
However, once the federal unemployment benefit ended in July, those savings began to be spent and about two-thirds of the saved funds were depleted by September, the researchers said.
TRENDPOST: August’s consumer spending was stronger than expected because households were spending the accumulated savings.
Now, as savings disappear, America’s nearly 11 million unemployed will slash spending even further, missing rent and other payments. The trend will slowly reverse, however, and spending will increase when Washington pumps in more cheap money to artificially inflate the failing economy.
