Personal income fell 2.7 percent in August compared to July, due entirely to the end of federal unemployment benefits of up to $600 a week, the U.S. commerce department reported.
Household income remained, however, at 2 percent above February’s mark because of one-time federal stimulus payments, ongoing unemployment benefits, and stock market profits, most of which accrued to the wealthiest 10 percent of the population.
Personal spending increased 1 percent in August over July, but far less than the 9-percent jump in May, 7 percent in June, and 2 percent in July.
Spending in some categories, such as cars and bicycles, has outpaced pre-pandemic amounts. The service sector – particularly restaurants and entertainment venues – lags far behind February’s mark.
U.S. economic growth will slow to 2.5 percent in this year’s fourth quarter, IHS Markit predicts, compared to the double-digit expansion analysts expect took place in the third.
