Households increased spending in May on services that they shunned earlier in the pandemic, helping position the economic recovery for a strong summer as more businesses fully reopen and consumers unleash pent-up demand.

Spending was flat last month as consumers cut back on purchases of big-ticket items and rotated more of their money toward in-person services. Still, this spring shaped up to be a solid one for spending: April expenditures were upwardly revised to a 0.9% increase from a previously reported 0.5% rise. Overall spending in May was also well above the same month a year ago, during widespread pandemic-related shutdowns.

Higher prices and product shortages likely hurt sales for some goods such as autos last month. Consumer demand is also weakening for some items—such as household appliances and furniture—that people bought during the pandemic while many stores and restaurants were closed. Economists expect Americans to step up spending on travel, restaurants and other services this summer—while continuing to spend less on goods as states and cities lift restrictions.

Source

Back to Latest