(Bloomberg) -- U.S. personal spending plummeted in March by the most on record as widespread shutdowns and job losses from the Covid-19 pandemic wreaked havoc on the economy’s main engine -- consumers.
Household outlays, which account for about two-thirds of the economy, plunged 7.5% from the prior month, the sharpest drop in Commerce Department records back to 1959, data showed Thursday. The median estimate in a Bloomberg survey of economists called for a 5.1% slump. Incomes declined 2%.
The numbers are the latest tally of how the shutdown was bearing down on a U.S. economy that’s all but officially in a recession. Stay-at-home orders across the country kept consumers from spending at restaurants, bars and retail shops. Shuttered businesses left millions of Americans without a paycheck to spend, leaving them dependent on government assistance.
After adjusting for inflation, spending slumped 7.3%, also the most ever and underscoring data out Wednesday that showed the sharpest drop in consumer spending since 1980 during the first quarter. Spending on durable goods slid 14.8%, while outlays for services slumped 9.5%.
The report also showed nominal incomes dropped the most since January 2013. reflecting a 3.1% decrease in wages and salaries that may reflect reduced hours or other pay cuts seen as a result of the pandemic.
Meantime, income payments through the government’s unemployment insurance program jumped 39.1% as more than 10 million people filed for jobless benefits in the month. A separate report Thursday showed another 3.8 million people filed initial jobless claims in the week ended April 25.
Inflation data included with the income and spending report showed that the Federal Reserve’s preferred core price gauge fell 0.1% from the prior month and rose 1.7% annually. The broader personal consumption expenditures price gauge, which the Fed officially targets for 2% inflation, rose 1.3% from a year earlier.
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