- [Narrator] Today the commerce department
released its monthly
consumer spending report.
Consumer spending drives the US economy,
and it's seen as a key indicator
of how deeply the current
coronavirus crisis
is affecting everyday Americans.
Personal consumption expenditures,
or all the goods and services purchased
in the United States,
are expected to decline
for the month of March.
With stores and restaurants
being forced to close
and jobless claims at record highs,
consumers are likely spending less money.
- This consumer spending
report is released monthly
and economists, investors, analysts,
all pay a ton of attention to it
because of the huge role that spending has
on the domestic economy.
- [Narrator] Consumer
spending makes up about
68% of GDP in the United States.
- This is a really wide ranging figure.
This represents everything
from people going to the mall,
to shop at stores, to buying groceries,
to getting haircuts.
It's anything you spend your money on.
So in March we saw
businesses across the country
start to shut their doors,
and social distancing
measures were put in place,
and people were staying home
more than they had maybe ever.
So that puts a serious hamper on
how much money they are spending.
- [Narrator] Consumer
spending was at record highs
a few months ago, driven
in part by a decade
of wage growth and low unemployment,
but US employees shed around
700,000 jobs in March,
raising the unemployment rate to 4.4%,
a number that's expected
to increase in April.
- What we're really seeing play out here
is kind of this domino
effect that spending can have
on the entire economy.
So a lot of people are left jobless,
they have less money to spend.
So that's less money that they're putting
into the pockets of other people.
- [Narrator] Retail sales
were down 8.7% in March,
with sales for clothing down
as much as 50% from a year ago.
- The US government has tried to offset
the impact of this coronavirus downturn
with a stimulus package like
we've never seen before.
And the hope is that people
who may be left jobless
or whose income may have taken a hit,
they might be able to pay their rent
or they'll go out there and
they'll spend this money
to potentially stimulate the economy.
- [Narrator] Some analysts
say consumer spending
can be a lagging indicator
of how the economy is doing,
because it looks at spending
from the previous month.
But its growth almost always
slows heading into a recession.
If you look at the last recession,
spending dipped during
the second half of 2008.
- Consumer spending is
obviously a huge chunk
of the domestic economy,
but how much people are
spending also tells you
how confident they're feeling about
their current economic situation,
their current jobs, their future jobs.
- [Narrator] A survey
of consumer sentiment
plunged around 20% in early April,
the largest monthly decline ever recorded.
There are some corners of the economy
where consumers are still spending
while staying at home.
For example, they're paying
for streaming services
and buying things online,
benefiting the stock prices of companies
like Netflix and Amazon.
- One worry that a lot of
analysts and economists
have right now is that once
businesses are reopened,
whenever that might be,
that people won't just bounce back
and start spending at the
pace that they did previously.
The worry is that the rebound could be
a little bit slower than what many people
are expecting right now.
