NEW YORK (NYTIMES) – With the fate of a federal aid package suddenly thrown into doubt by President Donald Trump, economic data on Wednesday (Dec 23) showed why the help is so desperately needed.
Personal income fell in November for the second straight month, the Commerce Department said on Wednesday, and consumer spending declined for the first time since April, as waning government aid and a worsening pandemic continued to take a toll on the US economy.
Separate data from the Labour Department showed that applications for unemployment benefits remained high last week and have risen since early November.
Taken together, the reports are the latest evidence that the once-promising economic recovery is sputtering.
“We know that things are going to get worse,” said Mr Daniel Zhao, senior economist with the career site Glassdoor.
“The question is how much worse.”
The answer depends heavily on two factors: the path of the pandemic and the willingness of the federal government to provide help.
Congress, after months of delays, acted on Monday, passing a US$900 billion (S$1.19 trillion) economic relief package that would provide aid to the unemployed, small businesses and most households.
Most urgently, it would prevent millions from losing jobless benefits at the end of this week.
But on Tuesday evening, Mr Trump demanded sweeping changes in the Bill, throwing into doubt whether he would sign it.
The data released on Wednesday underscored the economy’s fragility.
Personal income fell 1.1 per cent in November and is down 3.6 per cent since July, as the loss of federal assistance more than offset rising income from wages and salaries.
Consumer spending, which proved resilient in the summer and fall, declined 0.4 per cent, an ominous sign for small businesses trying to survive the winter.
The stakes are particularly high for the millions of Americans who would be left without an income during what could be some of the worst months of the pandemic.
The relief package passed this week would extend two emergency programmes that cover people who are left out of the regular unemployment system or whose benefits have expired.
Roughly 14 million people were enrolled in the two programmes in early December, according to the Labour Department, although fraud and data collection issues mean that figure may overstate the true total.
But if the Bill doesn’t become law, the two programmes will expire at the end of this week.
That could push nearly five million people into poverty virtually overnight.
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