Fourth stimulus check: can the fall in consumer consumption affect its approval?
Fourth stimulus check: can the fall in consumer consumption affect its approval?

Fourth stimulus check: can the fall in consumer consumption affect its approval?

According to data from Ministry of Tradeincreased consumption in the retail trade almost ten percent in March after third round of stimulus checks was sent. However, expenditure levels fell in April, rising 0.09%and continued their downward trend even further in May to -1.3%

Data from federal agencies show that after the third direct payment was distributed, people spent more. These increases were thought to be a cause virtuous cycles where companies get more revenue, would be more likely to staff up. With labor force increases, more money begins to circulate throughout the economy as workers begin use their payslips. But, this is only partially shown in the data, with unemployment continues to fall, but spending is also facing a downward trajectory.

Could a drop in retail spending mean another stimulus check is on the horizon?

Some politicians are watching consumption data and beneficial effects direct payments have had on families in the United States, support passed an additional stimulus check. However, it seems that momentum is declining on Capitol Hill while the legislatures try to reach an agreement infrastructureand other priorities, before on the way home for the summer holidays.

Although the May figures did not exceed April levels, some economists are not worried as they are still above pre-pandemic expenditure levels. What would start to worry legislators and experts is if the decline continues to levels seen in early stages of the pandemic or even before. For context, in February 2020, consumer retail spending was total $ 525 billion. Last month it was that number 620 billion

That New York Times reported on their discussions with experts who believe that the data show that “Consumers have most likely spent everything they need on furnishing their homes or upgrading their phones during the returning months of the pandemic“Instead of using in the retail market, they are switching to others, including travel and dining.

A full picture of economic spending will be available later this month when the Bureau of Economic Analysis publishes data on consumer consumption across markets and sectors. Throughout 2021 retail spending and the broader indicator have moved in unisonwhich means that households can keep their money or do not have the disposable income should spend at the level they did in March.

If the level of expenditure continues to fall, it could be a sign to legislators that more direct payments are needed. June, July and August Expenditure data will be crucial to understanding current trends for two main reasons.

The first factor is what effect vaccination will have on expenses when summer in the United States begins. With more Americans reporting that they feel safe traveling, eating, going to the movies, concerts and sporting events, there will certainly be an impact on household consumption.

The second factor, however, could lead to one decrease in expenditure. A student released by National Bureau of Economic Research almost found it seventy percent of unemployment plaintiffs have seen inncomes that exceed the levels from when they worked. As dozens of states cut federal pandemic-related unemployment benefits and workers re-enter the labor market for jobs that pay them less than they earned on unemployment, expenses may fall.

In September, when federal unemployment benefits end across the United States, lawmakers will have a wide range of indicators and data for assess whether the economy would benefit from another round of stimulus checks.

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