America’s consumers will not be stopped. Household spending rose in June even more than economists had expected, according to new government data out Friday.
Why it matters: Consumers are dealing with frustration with rising prices, concerns over the spread of COVID-19 variants and the lapsing of stimulus checks. But none of that put a damper on spending.
By the numbers: Personal consumption expenditures increased by 1.0% in June, which was notably stronger than the 0.7% gain expected by economists.
- Adjusted for inflation, spending was still up 0.5%.
- Consumption is running at an annualized pace of $15.8 trillion, which is well above pre-pandemic levels.
What they’re saying: "Inflation didn’t stop consumers from spending with abandon," GrantThornton chief economist Diane Swonk said, adding that they "drained their savings."
- "Consumers reopened their wallets in June as they embraced a summer of spending," Oxford Economics lead U.S. economist Lydia Boussour said. "They splurged on the high-contact services they greatly missed during the pandemic while shunning away from expensive and harder-to-find goods."
Yes, but: "It remains unclear how much the spread of the Delta variant will put a damper on spending gains in August," Swonk writes.
The bottom line: "Consumers defiantly kept spending, even during a surge in outbreaks," Swonk says. "We are learning to live with outbreaks and shift to online and deliveries to avoid contagion. Vaccinations should help to blunt the blow, despite the spread of the Delta variant.”