San Francisco Chronicle

Consumers boost spending


American consumers increased their spending by 1% in June — a dose of energy for an economy that is quickly rebounding from the pandemic recession but is facing new risks led by the delta variant.

Friday’s report from the Commerce Department also showed that personal incomes, which provide the fuel for spending, edged up in June after two months of big declines, reflecting the waning of several government support programs.

In its report, the government said goods purchases rose a modest 0.5%, while spending on services increased a stronger 1.2%. As vaccinatio­ns have increased and the economy has increasing­ly reopened, more Americans have been shifting their spending away from the physical goods that many purchased while hunkered down at home to spending on services, from haircuts to airline tickets to restaurant meals.

As a whole, household spending has been powering a robust economic recovery from the pandemic recession. On Thursday, the government estimated that the economy grew at a solid 6.5% annual rate last quarter — and consumer spending drove much of the gain: It advanced at a powerful 11.8% annual rate in the AprilJune quarter as more Americans left home to shop, travel and eat out.

Yet the economy’s prospects are now clouded by the possibilit­y of a resurgent coronaviru­s in the form of the highly contagious delta variant. Should a surge in viral infections cause many consumers to retreat back to their homes and pull back on spending, it would weaken the recovery.

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