WASHINGTON - US consumers cut spending by the most on record for the second straight month in April while boosting savings to an all-time high, and the growing frugality reinforced expectations the economy could take years to recover from the Covid-19 pandemic.
The Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, plunged 13.6 per cent last month, the biggest drop since the government started tracking the series in 1959. It eclipsed the previous all-time decrease of 6.9 per cent in March. Spending declined at restaurants, which have shifted to delivery and pick-up service only, and hotels and motels.But the Covid-19 crisis boosted incomes for consumers in April as the government's historic fiscal package worth nearly US$3 trillion doled out one-time US$1,200 cheques to millions of people and boosted unemployment benefits for the roughly 31 million out of work to cushion against economic hardship wrought by the pandemic.
"If the economy reopens quickly without consequence these savings represent considerable spending power in the second half. If it takes longer to reopen the economy, these savings will be used for sustenance over the next few months." TRADE COLLAPSES In a second report on Friday, the Commerce Department said goods exports tumbled 25.2 per cent to US$95.4 billion in April, a 10-year low. The broad decline in exports was led by a 65.9 per cent collapse in shipments of motor vehicles and parts. That outpaced a 14.3 per cent tumble in imports. As a result, the goods trade deficit widened 7.2 per cent to 69.7 billion last month.
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