By Martin Crutsinger
U.S. consumers slowed their spending by 0.2% in December, cutting back for a second straight month in a worrisome sign for an economy struggling under the weight of a still out-of-control pandemic.
The decline reported Friday by the Commerce Department followed a seasonally adjusted 0.7% drop in November. It was the latest sign that consumers, whose spending is the primary driver of the U.S. economy, are hunkered down and avoiding traveling, shopping, and dining out. Since making a brief bounce-back from the viral pandemic last spring, consumer spending has barely grown. Sales at retailers have declined for three straight months.
Friday's report from the government also showed that personal incomes, which provide the fuel for spending, rose a modest 0.6% after two months of declines. Yet Americans who have been fortunate enough to keep their jobs have been largely stockpiling savings rather than spending.
The latest figures reflect a shaky economy. On Thursday, the government estimated that the economy grew at a 4% annual rate in the final three months of 2020 but shrank last year by the largest amount in 74 years. At the same time, the job market is faltering, with nearly 10 million jobs still lost to the pandemic, which erupted 10 months ago. Hiring has slowed for six straight months, and employers shed jobs in December for the first time since April.
The outlook for 2021 remains uncertain. Economists warn that a sustained recovery won’t likely take hold until vaccines are successfully distributed and administered nationwide and government-enacted rescue aid spreads through the economy, which could take months. In the meantime, millions of individuals and businesses continue to struggle.
Last week, for instance, 847,000 laid-off Americans applied for unemployment benefits, an elevated figure that showed that many companies keep cutting jobs as the pandemic continues to rage. Before the virus erupted in the United States in March, weekly applications for jobless aid had never topped 700,000, even during the Great Recession.
In the coming months, as vaccines become widely distributed and administered, growth is expected to revive. After an initial slowdown in the current quarter, many analysts believe growth will achieve stronger gains for the rest of the year, allowing GDP to expand roughly 5% for 2021 as a whole.
Yet that forecast hinges on the widespread use of vaccines and the gradual reopening of businesses and the rehiring of millions of laid-off workers. The prospect of increased support from Congress’ approval of at least part of President Joe Biden’s $1.9 trillion relief plan and pent-up spending from the savings buildup of higher-income households has also raised hopes. A $900 billion rescue aid package that the government enacted late last year is providing some help, too.
On Wednesday, the Federal Reserve kept its benchmark short-term interest rate near zero and stressed that it would keep pursuing its low-rate policies until a recovery is well underway. The Fed acknowledged that the economy has faltered in recent months, with hiring weakening especially in industries affected by the raging pandemic, notably restaurants, bars, hotels and others involved in face-to-face public contact.
President Donald Trump has fired one of two Democratic members of the U.S. Surface Transportation Board to break a 2-2 tie ahead of the board considering the largest railroad merger ever proposed.
Ford is recalling more than 355,000 of its pickup trucks across the U.S. because of an instrument panel display failure that’s resulted in critical information, like warning lights and vehicle speed, not showing up on the dashboard.
Nvidia reported a 56% increase in second-quarter revenue and a 59% rise in net income compared to a year ago.
The Rev. Al Sharpton is set to lead a protest march on Wall Street to urge corporate America to resist the Trump administration’s campaign to roll back diversity, equity and inclusion initiatives. The New York civil rights leader will join clergy, labor and community leaders Thursday in a demonstration through Manhattan’s Financial District that’s timed with the anniversary of the Civil Rights-era March on Washington in 1963. Sharpton called DEI the “civil rights fight of our generation." He and other Black leaders have called for boycotting American retailers that scaled backed policies and programs aimed at bolstering diversity and reducing discrimination in their ranks.
President Donald Trump's administration last month awarded a $1.2 billion contract to build and operate what's expected to become the nation’s largest immigration detention complex to a tiny Virginia firm with no experience running correction facilities.
Netflix CEO Ted Sarandos claims audiences don't want to watch Netflix movies in theaters, but that seems not to be the case recently.
Chipmaker Nvidia is poised to release a quarterly report that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.
Cracker Barrel said late Tuesday it’s returning to its old logo after critics — including President Donald Trump — protested the company’s plan to modernize.
Low-value imports are losing their duty-free status in the U.S. this week as part of President Donald Trump's agenda for making the nation less dependent on foreign goods. A widely used customs exemption for international shipments worth $800 or less is set to end starting on Friday. Trump already ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, but having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. Purchases that previously entered the U.S. without needing to clear customs will be subject to the origin country’s tariff rate, which can range from 10% to 50%.
Southwest Airlines will soon require plus-size travelers to pay for an extra seat in advance if they can't fit within the armrests of one seat. This change is part of several updates the airline is making. The new rule starts on Jan. 27, the same day Southwest begins assigning seats. Currently, plus-size passengers can pay for an extra seat in advance and later get a refund, or request a free extra seat at the airport. Under the new policy, refunds are still possible but not guaranteed. Southwest said in a statement it is updating policies to prepare for assigned seating next year.
