After months of lockdowns, one might have thought that Americans would jump at the opportunity to spend money on goods and services besides takeout and streaming services.
But the opposite happened in the second quarter this year.
Americans spent 9% less in the second quarter compared to the first quarter of this year, according to a report published Tuesday by the Financial Health Network, a nonprofit organization that receives funding from Citi Foundation
and Principal Foundation.
“Incomes remained largely flat, adjusted for stimulus and tax payments,” the report said. “The exception was households experiencing hardships such as housing or food insecurity, which declined 17% in income during the second quarter.”
Also Tuesday, consumer confidence in the U.S. sank to a 6-month low on anxiety around the delta variant of the coronavirus. The consumer confidence index dropped to 113.8 in August from 125.1 in July.
The personal savings rate, as a percentage of personal disposable income, has averaged 7.25% since the Great Recession to the beginning of the COVID-19 pandemic in February 2020. Since then, it has averaged 17.9%, and fallen to 9.6% in July 2021, according to the St. Louis Federal Reserve.
Americans’ personal saving rates fell to 9.4% from 26.9% in the first quarter of this year
During the second quarter Americans did not receive any stimulus checks, and jobless individuals in 26 states were cut off from collecting an extra $300 a week in unemployment benefits.
(Some 9 million Americans in the remaining 24 states are set to be cut off from the extra $300 a week this weekend.)
However, the latest data from the Financial Health Network said that American households with incomes above $100,000 a year were an exception — they spent 280% more per month on recreational activities and 70% more per month on travel last quarter compared to the first quarter of this year.
This suggests that “recovery is not yet showing up for people who need it most,” said Rob Levy, vice president of research and measurement at the Financial Health Network.
“The stimulus and tax refunds did their job helping financially vulnerable people make ends meet over the last quarter and while the Child Tax Credit is expected to help families, an uneven recovery could put those gains in jeopardy in the second half of 2021,” he added.