SIGN IN PRO WATC H L I S T MAKE IT  SELECT 

SEARCH QUOTES 
USA • INTL
 MARKETS BUSINESS INVESTING TECH POLITICS CNBC TV

ECON O M Y

US consumer spending plunges 7.5%

in March, reflecting virus
PUBL I S H ED THU, AP R 30 2020 • 9:12 A M E DT | UPDAT E D THU, APR 30 2020 • 10:2 5 A M EDT

SHARE    

TRENDING NOW
KEY U.S. consumer spending plunged 7.5% in March.
POINTS 1.6% of Americans have a
perfect 850 credit score
The drop reflected the growing impact of the coronavirus pandemic as Americans —but here’s the only one
complied with stay-at-home orders.
1 that matters, experts say

The spending plunge was accompanied by a sharp 2% decline in personal incomes 42-year-old retiree: ‘I lost
in March with both declines attributed to impacts of efforts to deal with the more than $600,000 due
pandemic. to the pandemic. Now I’m
2 second-guessing early
retirement’

Amazon reports
earnings, plans to spend
all Q2 profits on
3 coronavirus response

Dow futures fall more

than 400 points after
Wall Street wraps up best
4 month in three decades

Trump suspects
coronavirus outbreak
came from China lab,
5 doesn’t cite evidence

Lay Guzman stands behind a partial protective plastic screen and wears a mask and gloves as she works as a cashier at the Presidente
Supermarket on April 13, 2020 in Miami, Florida.
Joe Raedle | Getty Images

U.S. consumer spending plunged 7.5% in March, reflecting the growing

impact of the coronavirus pandemic as Americans complied with stay-at-home
orders.

The Commerce Department said that the spending decline was the sharpest
monthly drop on records that go back to 1959, exceeding the previous record,
a decline of 2.1% in January 1987.

Personal incomes also fell sharply last month, declining by 2% with wages and
salaries, the largest part of incomes, falling by 3.1% as millions of Americans
started getting lay-off notices.

The report said that the country experienced big declines as “consumers
cancelled, restricted or redirected their spending.”

The government reported Wednesday that the overall economy, as measured

by the gross domestic product, shrank at an annual rate of 4.8% in the January-
March quarter, led by the biggest quarterly drop in consumer spending since
1980.

Consumer spending accounts for 70% of economic activity and has been the
economy’s standout performer in recent years. However, with further sharp
spending declines forecast, analysts are predicting that GDP will shrink by
around 40% in the current April-June quarter, the biggest quarterly decline on
record.

The GDP decline in the first quarter signalled the end of the country’s longest
economic expansion, which had begun in June 2009. The Trump
administration is hoping this downturn will be V-shaped, with a sharp fall
followed by a rapid increase as stay-at-home orders expire and Americans go
back to work and resume normal activities such as shopping and eating in
restaurants.

But many private economists worry that the downturn could linger until a
vaccine against the virus is developed and becomes widely available,
something that may not occur until the middle of next year.

“The coronavirus fear, the social distancing measures, the financial volatility
and plummeting confidence have taken a severe toll on consumers’ ability and
willingness to spend,” said Lydia Boussour, senior U.S. economist at Oxford
Economics.

The March report showed that an inflation gauge closely followed by the
Federal Reserve dropped 0.3% in March and is up 1.3% from a year ago, well
below the Fed’s 2% target for inflation.

The Fed on Wednesday signalled that it would keep its benchmark interest rate
near zero for the foreseeable future as part of its extraordinary efforts to bolster
an economy expected to suffer its worst economic crisis since the 1930s.

      

Subscribe to CNBC PRO Licensing & Reprints CNBC Councils News Tips  CNBC Newsletters
Supply Chain Values Advertise With Us Join the CNBC Panel Got a confidential news tip? We want to hear Sign up for free newsletters and get more CNBC
from you. delivered to your inbox
Digital Products News Releases Closed Captioning

GET IN TOUCH SIGN UP NOW

Corrections About CNBC Internships

Site Map Podcasts AdChoices Get this delivered to your inbox, and more info about our
products and services. 

Careers Help Contact

Privacy Policy | Do Not Sell My Personal Information | Terms of Service

© 2020 CNBC LLC. All Rights Reserved. A Division of NBCUniversal

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Market Data Terms of Use and Disclaimers

Data also provided by