US consumer spending plunged 7.5 per cent in March, reflecting the growing impact of the coronavirus pandemic as Americans complied with stay-at-home orders.
The Commerce Department said that the spending plunge was accompanied by a sharp 2 per cent drop in personal incomes in March with both declines attributed to impacts of efforts to deal with the pandemic.
The report said that the country experienced big declines as "consumers cancelled, restricted or redirected their spending." The government reported Wednesday that the overall economy, as measured by the gross domestic product, shrank at an annual rate of 4.8 per cent in the January-March quarter, led by the biggest quarterly drop in consumer spending since 1980.
Consumer spending accounts for 70 per cent of economic activity and has been the economy's standout performer in recent years However, with further sharp spending declines forecast, analysts are predicting that GDP will shrink by around 40 per cent in the current April-June quarter, the biggest quarterly decline on record.
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