U.S. households likely cut spending last month, as cold weather struck much of the country, but are primed to pick up shopping again with the pandemic easing and a new round of stimulus money landing in bank accounts.
The Commerce Department is expected to report Friday that household income and spending both dived in February, partly reversing a surge in each category earlier this year. The declines will likely only be temporary.
Cold weather—including storms that shut down sections of Texas and other states—prevented many people from dining out, ordering food online or going to stores last month. Household incomes also likely fell from abnormally high levels in January, when the government distributed stimulus checks of up to $600 a person in most households under a $900 billion economic-relief plan approved by Congress late last year. That law also provided enhanced employment benefits of $300 a week for jobless workers.
A spending surge is likely in the offing. Millions of people each day are getting a Covid-19 vaccine, and many are starting to venture out in public and shop and travel. Meanwhile, the federal government this month is sending out yet another round of stimulus money—this time checks of up to $1,400, a part of another Covid-19 relief package worth $1.9 trillion signed by President Biden. The aid—along with other measures by lenders and landlords to suspend consumers’ monthly payments on debt during the pandemic—has left many households sitting on a pile of cash.
That combo—higher incomes and a rising number of people shielded from the worse effects of the deadly virus—is expected to unleash a burst of economic activity in coming weeks, as many Americans resume activities they have put off for a year.
