U.S. consumer spending slowed in August, with a key retail sales gauge unexpectedly declining, as extended unemployment benefits were cut for millions of Americans, offering more evidence that the economic recovery from the COVID-19 recession was faltering.
So-called core prices dropped one tenth of a percent last month. Those are retail sales excluding automobiles, gasoline, building materials and food service. Wall Street was anticipating a half percent increase.
The report from the Commerce Department on Wednesday could ramp up pressure on the White House and Congress to restart stalled negotiations for another fiscal package. At least 29.6 million people are on unemployment benefits and their benefits have sharply declined in the last month.
Consumer spending accounts for more than two-thirds of the U.S. economy, and signs of fatigue are likely to grab the attention of Federal Reserve officials as they wrap up a two-day policy meeting.
Despite that data, improving outlooks for U.S. and China nudged the OECD Wednesday to upwardly revise its forecast for the global economy. It now sees the world economy shrinking by 4.5% this year instead of 6%.