New economic data from the federal government on Wednesday highlighted the recovery’s precarious state.
A report from the Commerce Department showed that personal income fell in November for the second straight month and that consumer spending fell for the first time since April.
Separately, the Labor Department said applications for unemployment benefits remained high last week ahead of a new injection of federal aid.
About 869,000 people filed new claims for state jobless benefits. That was down from a week earlier but is significantly above the level in early November, before a surge in coronavirus cases prompted a new round of layoffs in much of the country.
Another 398,000 people filed for Pandemic Unemployment Assistance, one of two federal programs to expand jobless benefits that were set to expire this month without congressional action.
Help may be on the way. After months of delays, Congress on Monday passed a $900 billion economic relief package providing aid to unemployed people, small businesses and most households. Most urgently, it would prevent jobless benefits from expiring at the end of this week for millions of people. But on Tuesday evening, President Trump demanded sweeping changes in the bill, throwing into doubt whether he would sign it.
The data released Wednesday showed the toll that the delays in aid — along with rising virus cases — have taken on the economy. Personal income fell 1.1 percent in November and is down 3.6 percent since July, as waning federal assistance more than offset rising income from wages and salaries. Consumer spending, which helped drive the initial recovery after lockdowns lifted last spring, also faltered, falling 0.4 percent as the weather cooled and virus cases rose. Spending on dining and travel both fell last month, the Commerce Department said.
The income and spending data was just the latest evidence that after rapid gains in the spring and summer, the recovery has stalled and could be going into reverse. Some forecasters expect the December employment report to show a net loss of jobs.
“That huge looming cliff that everyone’s been talking about for months on end, that’s been averted,” said AnnElizabeth Konkel, an economist for the hiring site Indeed. “But there’s no momentum forward. It feels like we’re just stuck. Hopefully the new stimulus package will help get a little more wind in our sails.”
The relief bill was smaller than many economists said was needed to carry the economy through the pandemic and ensure a robust recovery. It won’t revive industries that have been ravaged by the pandemic or undo the damage left by months of lost income for many households.
But the recent deterioration in the economy shows why…
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