U.S. consumer spending and personal income remained steady in February, another sign that the economy was holding firm before the country was gripped by the coronavirus pandemic.
Personal-consumption expenditures, a measure of household spending, rose 0.2%, a repeat of the previous month’s gain, according to data released Friday by the U.S. Department of Commerce. Income growth also mirrored January’s figure, climbing 0.6%.
The data, combined with previous economic releases, continues to paint a picture of the shape of the U.S. economy before the effects of the coronavirus were felt.
It comes after the country received its first concrete numbers showing the impact of the coronavirus on the economy. On Thursday, statistics released by the Labor Department showed that nearly 3.3 million people applied for jobless claims last week, a number that shattered previous records.
While the report looks at past information, some of its data may have shown a small amount of caution among Americans as they prepared for the virus. Stan Shipley, a managing director and economist and strategist at Evercore ISI, noted that “people were starting to pull back from discretionary spending.”
But overall, the numbers may pale in comparison to what could be in the next report, set for release on Thursday, April 30.
“Given what we’re likely to see in March and April, this was nothing,” Christopher Low, chief economist at FHN Financial, said.
In the last several weeks, the virus has wreaked havoc on the country’s economy, as most states have been effectively locked down in order to prevent the spread of the disease. With the federal government encouraging most residents to stay in their homes, unless they are doing essential activities, stores and restaurants are struggling to make a profit. Businesses in the leisure, travel, and entertainment industries have been hit particularly hard.
However, the steadiness of the consumer spending number in the current report may reflect the calm that Americans felt in the month of February, even as the virus gripped China. During that time, the effects of the virus were barely being seen in the United States, leading many Americans to not be too worried about what it might do to their finances.
This was the case for Rachel Banner, a childcare provider in Baltimore, Maryland.
“My spending habits weren’t even a question at that point. I was spending like normal and not feeling like I needed to start really buckling down and saving hard,” Banner said.
Banner said that she had also built a decent amount of savings, but about a week before the virus started to take hold in the country, her furnace went up and she had to replace it. The expense took out a significant amount of her savings. Now, she worries about spending, because of the uncertainty surrounding how long the virus could affect the country.
The length of the pandemic’s impact is critical. The report did show that the personal savings rate rose to 8.2%, edging above a rate of 7.9% from January. This suggests that some Americans may have a small cushion to fall back on for a short time, as consequences of the pandemic set in, particularly with rent due on April 1. However, if the pandemic stretches into the summer, things could become more difficult.
To help, the federal government has also stepped in. On Friday, President Trump signed into law a roughly $2 trillion dollar stimulus package, the largest emergency aid package in U.S. history. This came on the heels of the Federal Reserve signaling earlier in the week that it would take unprecedented measures to help businesses, and the economy, stay afloat.