United States personal income decreased 0.7 percent in October month on month as fiscal support fades, while personal consumption expenditures (PCE) rose 0.5 percent, the Commerce Department reported Wednesday.
“Federal economic recovery payments slowed as pandemic-related assistance programs continued to wind down,” according to the report released by the department’s Bureau of Economic Analysis (BEA).
The extra 600-dollar weekly unemployment benefits from the federal government, as well as some other relief measures approved in late March, expired at the end of July, but Congress and the White House remain deadlocked over the next round of fiscal support.
“Recovery is showing signs of weakening as we move from summer into fall,” Diane Swonk, chief economist at Grant Thornton, a major accounting firm, wrote in a blog Wednesday.
“Cooler temperatures, which shuttered outdoor venues, a drop in unemployment benefits and a jump in COVID cases put a damper on spending and confidence,” Swonk said.
The PCE price index was unchanged from September, and the PCE price index excluding food and energy, also known as the core PCE price index, was also unchanged, the BEA report showed.
On a year-over-year basis, the overall PCE and core PCE deflators slowed to 1.2 percent and 1.4 percent, respectively. “That is the lowest pace since July and well below the 2 percent target of the Federal Reserve,” Swonk noted.
Also on Wednesday, the Labor Department reported that the number of initial jobless claims in the United States rose for the second week in a row to reach 778,000 last week, signaling the recent COVID-19 surge has begun to weigh on the labor market recovery.
Nearly 1.2 million new cases were reported in the last seven days, according to the data updated by the United States Centers for Disease Control and Prevention on Wednesday. Total cases have surpassed 12.7 million.