2 startling graphs illustrate how nervous Americans are about the future of the economy
April was a month of historic increases and decreases due to the coronavirus outbreak.
On Friday, the government reported that consumer spending in April plunged 13.6 percent from the month prior, which Bloomberg says is "the sharpest drop in Commerce Department records back to 1959." Meanwhile, the personal savings rate, which describes the amount of a person's disposable income that they are putting into savings, hit 33 percent in April, "by far the highest since the department started tracking in the 1960's, and [surpassing the] consumer savings during the Global Financial Crisis," CNBC reports.
The high personal savings rate, combined with the extremely low consumer spending, reflects Americans' jitters about spending money during the outbreak, while the economy is in turmoil. Additionally, The New York Times credits some of the money-hoarding to the fact that "the $600 per week in extra unemployment benefits that have allowed tens of millions of laid-off workers to pay rent and buy groceries will expire at the end of July."
A certain amount of the stagnation is also due to the simple fact that there are fewer opportunities to be spending money in the first place, with so much of the country still shutdown. Still, "the paradox is that if everyone across the broad economy is hunkering down, that only makes the recession worse," Marc Odo, portfolio manager at Swan Global Investments, told CNBC.
Personal income, meanwhile, actually rose 10.5 percent in April, a record boost due to the federal stimulus payments and unemployment benefits, while economists had expected a decrease of 2.1 percent, according to MarketWatch. Jeva Lange