U.S. personal consumption expenditures (PCE) increased 5.6 percent in June month-on-month as states continued reopening efforts, the U.S. Commerce Department reported Friday.
PCE dropped by a revised 6.7 percent in March, and then nosedived by a revised 12.9 percent in April amid widespread shutdowns triggered by the COVID-19 outbreak. As states started to reopen, PCE rose by 8.5 percent in May.
Personal income dropped 1.1 percent in June, primarily reflecting a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in May, the report noted.
Partially offsetting the decrease in other government social benefits were increases in compensation of employees and proprietors’ income as portions of the economy continued to reopen in June, according to the report.
The data came one day after the Labor Department reported initial jobless claims in the United States rose to 1.43 million last week amid a resurgence in COVID-19 cases, following an increase in the previous week.
The latest data “confirms that the economy’s recovery has lost momentum in recent weeks,” Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis.
Also on Thursday, the U.S. Commerce Department reported that the economy contracted at an annual rate of 32.9 percent in the second quarter, the steepest decline since the government began keeping records in 1947.
Over 20 states have already paused or partially reversed reopening efforts amid an alarming resurgence of COVID-19 cases, which, according to analysts, could undermine the nascent economic recovery.