Consumers are starting to run out of artificial steam. The free Pandemic money has been dropping for months and in November nearly faded out. For the first time since April, consumers spent less all around; they spent less on services, nondurable goods, and even on durable goods, which had been spiking in astounding manner.
Personal income from all sources in November fell 1.1% from October, to the lowest since March, to a seasonally adjusted annual rate of $19.49 trillion, according to data from the Bureau of Economic Analysis today. It was down 7.6% from its fabulous stimulus-and-extra-unemployment-money-induced spike in April. But it’s still up 3.8% from the Good Times a year ago, now, during the Pandemic when over 20 million people are still claiming state or federal unemployment benefits:
Income from unemployment insurance (UI) had exploded from $28 billion (annual rate) in February to $1.40 trillion in June, fueled by the extra $600-a-week in federal unemployment benefits, which expired at the end of July, and by the federal PUA benefits claimed by gig workers. By November, income from UI had plunged down to $277 billion (annual rate), the lowest since March. But it was still about 10 times the Good Times level!Majestic Overshoot of Stimulus Money Ended. Faced with Second Wave, Americans Cut Back, Even on Durable Goods | Wolf Street