U.S. consumer spending likely rose in July as the labor market continued to add jobs, although economists caution that last month’s expiration of $600 in enhanced weekly unemployment benefits could dent household spending ahead.
The Commerce Department will release data on July household income and spending on Friday. Economists surveyed by The Wall Street Journal expect consumer spending rose 2% in July from the prior month.
That would mark a slowdown from the previous two months when spending rebounded strongly after collapsing amid coronavirus-related shutdowns. Consumer spending rose 5.6% in June and 8.5% in May. Economists say the wave of new coronavirus cases that swept the U.S. during July weakened the nascent economic recovery, even though nearly two million Americans joined the workforce.
“What we’re seeing is a dichotomy between those who are employed, and seem to be doing pretty well, and those who are not employed and are losing income,” said David Berson, chief economist at Nationwide Mutual Insurance Co.