U.S. consumer spending rose moderately in February and momentum is set to fade rapidly in the coming months, with the coronavirus pandemic upending life for Americans.
The highly contagious virus, which causes a respiratory illness called COVID-19, is wreaking havoc on the economy, prompting the Federal Reserve to take extraordinary measures and the U.S. Congress to assemble a record $2 trillion (1.6 trillion pounds) stimulus. Economists say the economy is already in recession.
The government reported on Thursday that the number of Americans filing for unemployment benefits rocketed to a record 3.28 million last week, eclipsing the previous record of 695,000 set in 1982.
"Social distancing measures taken in response to the fast-spreading coronavirus along with extreme financial market volatility will take a severe toll on the main engine of economic growth," said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York.
The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.2% last month as households spent more on electricity and gas, offsetting decreases in outlays on motor vehicles and parts as well as recreational goods.
Last month's increase matched the gain in January and was in line with economists' expectations.
The United States now has the most coronavirus cases in the world, with more than 82,000. Governors in more than half of the nation's 50 states have ordered residents to stay mostly indoors, affecting over 100 million people.
Restaurants and bars have been shuttered, and airline travel severely curtailed, which economists say will greatly offset any boost to consumer spending from grocery purchases following a wave of panic buying as Americans prepared to hunker down.
When adjusted for inflation, consumer spending edged up 0.1% for a third straight month in February.
U.S. financial markets were little moved by data.