People ride bikes past closed stores at Times Sqaure in New York City, the United States, May 29, 2020. (Xinhua/Wang Ying)
U.S. personal consumption expenditures nosedived 13.6 percent in April, the sharpest drop in government records since six decades ago.
WASHINGTON, May 30 (Xinhua) -- U.S. personal consumption expenditures (PCE) nosedived 13.6 percent in April month-on-month amid widespread shutdowns triggered by the COVID-19 outbreak, the U.S. Commerce Department reported on Friday.
The plunge, following a revised 6.9-percent drop in March, has been the sharpest drop in government records since six decades ago, according to the report released by the department's Bureau of Economic Analysis.
PCE, which accounts for about two thirds of the U.S. economy, had seen a moderate growth before the COVID-19 outbreak, increasing by 0.2 percent in February from the prior month.
Personal income, meanwhile, surged 10.5 percent in April, primarily reflecting a sharp rise in "government social benefits" to persons as payments were made to individuals from federal economic recovery programs in response to the COVID-19 pandemic, the bureau said.
In response to the COVID-19 crisis, U.S. Congress in late March passed a 2.2-trillion-dollar economic relief bill, which includes expansion of unemployment benefits, 1,000-dollar-plus direct payments for working Americans, among other things.
"Thanks to a massive surge in government transfer payments, April 2020 goes down in the history books as the largest monthly increase in personal income on record. Spending, however, absolutely crashed," Tim Quinlan, a senior economist at Wells Fargo Securities, wrote in an analysis.
Quinlan noted that things could get worse. "Real consumer spending is heading into the second quarter falling at three-month annualized rate of 56.8 percent," he said. "Forecast for Q2 consumer spending will likely be revised sharply lower."
Restaurant staff members wearing face masks work on the Cocoa Beach pier in Cocoa Beach, Florida, the United States, on May 28, 2020.(Photo by Ting Shen/Xinhua)
The new data came one day after the Commerce Department revised down gross domestic product (GDP) in the first quarter to a 5.0-percent annualized contraction in a second estimate, 0.2 percentage point lower than the advance estimate in April.
Jeffrey Sachs, a renowned economics professor at Columbia University and senior United Nations advisor, told Xinhua earlier that the quarterly report "caught just the final days" of March after the U.S. lockdown, noting that the decline in the second quarter will be "much deeper."
Sachs' view is shared by many, including Federal Reserve Chairman Jerome Powell, who recently said the U.S. economy could shrink dramatically in the second quarter, at an annualized rate of more than 20 percent or 30 percent.
At a virtual event held by Princeton University Friday, Powell said he is concerned about a potential second wave of outbreak. "I think a second wave could be what would really undermine public confidence and might make for a significantly longer recovery, weaker recovery." ■