On Friday, data released from the US Commerce Department had revealed a sharp rise in US consumer spending for the second consecutive month in June, laying off the groundworks for a prominent economic recovery over the third quarter of the year following a pandemic-scarred second quarter that had witnessed the US GDP contracting over a record 32 per cent, however, sceptics warned of several hindrances en route to recovery due to a resurgence in the pandemic outbreak alongside a likely shortened unemployment benefits until end-2020.
Besides, although the Trump Administration’s monumental $3 trillion pandemic relief bill announced on April this year including an additional $600 pay off per week for the unemployed Americans who had been laid off due to the pandemic outbreak, appears to have cemented the way for the gains of past two months in consumer spending, the expanded jobless benefit program had been expired last month.
Apart from a 5.6 per cent rise in consumer spending in June which followed a record 8.5 per cent gain in May, widely contemplated as the bedrock of the US economy accountable for roughly two-third of the country’s entire economic activities, other economic data released on Friday had reflected a darker portrait for the US economy in a medium- to longer-term outlook as a persistent rise in pandemic cases alongside the expiring unemployment benefits had inflicted deeper wounds into the consumer sentiment index last month.
June data affirms initial phase of recovery, tout optimists
On top of that, while a raft of Wall Street analysts remained fretted over a “V” shaped recovery of the US economy following the Great Depression in the second quarter and had been predicting a “W” shaped recovery instead from the pandemic-led economic slump, another set of analysts became cautiously optimistic over an earlier-than-anticipated economic recovery, as addressing to a robust consumer spending for straight second month in a row, largely prodded by the mammothlike pandemic relief bills sanctioned by the Trump Administration, a Chief US economist at Oxford Economics in New York, Gregory Daco said following reveal of June US Consumer Spending, “The June data confirm the strong initial phase of the recovery, but we caution that rear-view mirror economics could drive us off a cliff.
Low-income families have nearly regained pre-COVID spending levels supported by strong fiscal aid, but with numerous assistance programs expiring, and a mismanaged health crisis constraining spending on services, the second phase of the recovery will likely be much slower. ”