USA - Consumer Economy Running on Fumes of Stimulus
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Twisted Picture of a Consumer Economy Running on Fumes of Stimulus
Incomes from wages, interest, and dividends sagged from pre-Pandemic era. But stuffed with stimulus, Americans broke records splurging on Goods, as spending on Services, the biggie, lagged far behind.
By Wolf Richter for WOLF STREET.
Consumers - lacking income from wages, interest, and dividends, but stuffed with stimulus money, the extra $600 a week in unemployment benefits, the amounts not-spent on mortgages in forbearance or default, the amounts not-spent on rents under eviction bans, and too the amounts from the stock-market gains - splurged on goods. They spent record amounts on durable goods, such as appliances, laptops, and bicycles. And they spent near-record amounts on nondurable goods such as cleaning products or food.
And some of those goods are made in the US, but a lot of those goods are made in China, Mexico, Germany, Bangladesh, etc., and thereby much of that stimulus was a stimulus for those countries, and for the container shipping lines, and also finally in the US for trucking companies, railroads, and mostly online retailers.
But the biggie in the US is services such as rent, health care, or food services. Before the Pandemic, 66.7% of what consumers spent went to services. But consumer spending on services was down 9.2% in July from pre-Pandemic February.......
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