The 11.8% rise in consumer spending, the fourth-largest increase in 74 years of quarterly data, was spurred by $1,400-per-person stimulus payments issued in March, as well as fewer restrictions on business and movement. (The biggest-ever spending jump was 41.4% in the third quarter of 2020, following the economy’s initial reopening, with the other big gains coming in the early 1950s.) Thanks to the pumped-up spending, real gross domestic product, or GDP, increased at an annual rate of 6.5% in the second quarter, lifting total economic output back above its pre-pandemic peak. Personal spending is the largest contributor to GDP, the total value of all the country’s goods and services. James Knightley, chief international economist at ING, said the second-quarter spending shows that “the U.S. consumer continues to fire on all cylinders.” Have a question, comment, or story to share? You can reach Rob at ranthes@thebalance.com.
