US consumer spending sinks by record 13.6% in face of coronavirus

Coronavirus pushes JPMorgan credit card spending down 40%

JPMorgan credit card users’ spending is down significantly. FOX Business’ Lauren Simonetti with more.

WASHINGTON — U.S. consumer spending plunged by a record-shattering 13.6% in April as the viral pandemic shuttered businesses, forced millions of layoffs and sent the economy into a deep recession.

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Last month's spending decline was far worse than the revised 6.9% drop in March, which itself had set a record for the steepest one-month fall in records dating to 1959. Friday's Commerce Department figures reinforced evidence that the economy is gripped by the worst downturn in decades, with consumers unable or too anxious to spend much.


Even with employers cutting millions of jobs during the month, personal incomes soared 10.5% in April, reflecting billions of dollars in support through government payments in the form of unemployment benefits and stimulus checks.

The depth of the spending drop is particularly damaging because consumer spending is the primary driver of the economy, accounting for about 70% of economic activity. Last month’s figure signaled that the April-June quarter will be especially grim, with the economy thought to be shrinking at an annual rate near 40%. That would be, by far, the worst quarterly contraction on record.

Friday's report showed sharp declines in consumer spending across the board — from durable goods like cars to non-durable items such as clothing and services ranging from doctor visits to haircuts.

In April, the nation's jobless rate was 14.7%, the highest since the Great Depression, and many economists think it will top 20% for May. States are gradually restarting their economies by letting some businesses reopen with certain restrictions, and some laid-off employees are being recalled to work. Still, the job market remains severely depressed, and the outlook for the rest of the year is still bleak.

Some financial support for the tens of millions of consumers who have been laid off over the past two months is coming from weekly unemployment benefits. Besides whatever unemployment aid states are providing to laid-off workers, the federal government is providing $600 a week in additional benefits.


A debate in Congress over whether to extend the $600 a week in federal unemployment aid looks sure to intensify, with the number of people receiving that aid now topping 30 million — one in five workers. The money is set to expire July 31. Yet with the unemployment rate widely expected to still be in the mid-teens by then, lawmakers will face pressure to compromise on some form of renewed benefits.

The Trump administration asserts that the economy will begin to regain its health in the second half of the year, with businesses increasingly reopening and restoring jobs and consumers increasing spending. Most economists say, though, that the lingering effects of the job losses and likely business bankruptcies will take longer to overcome, especially if a second wave of the coronavirus erupts. Analysts generally believe the economy won't manage to sustain a solid recovery until a vaccine is widely available.

And until Americans resume spending at something close to their previous levels, jobs won't likely return in a significant way. Data from Chase Bank credit and debit cards shows that consumers have slowly increased their spending since the government distributed $1,200 stimulus checks in mid-April.

But most of that increase has occurred in online shopping. Spending in regular brick and mortar stores, which makes up the vast majority of consumer spending, is still down 35% from a year ago, according to Chase, after having plummeted 50% at its lowest point.

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Get the best mortgage rates by following these 5 steps

Coronavirus has brought mortgage interest rates down near historic lows. Here’s what you can do to ensure that you get the best rates when you purchase a home or refinance.

There’s no denying the coronavirus pandemic has had a profound impact on the economy, including mortgage rates. A series of emergency rate cuts by the Federal Reserve has dropped mortgage and refinance interest rates to near historic lows, which has led homebuyers and homeowners alike to do their best to take advantage of these rate trends while they last.

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If you’ve been wondering how you can save with current mortgage rates, read on below. Here are five ways to ensure you’re getting the lowest mortgage rate possible to meet your financial goals.

Shop, shop, shop

Not all mortgage rates and refi rates are created equal. In fact, the mortgage and refinance rate you’re given can vary from day to day and from lender to lender. That’s why everyone who’s thinking of buying a home or doing a home refinance should shop around to ensure they’re receiving the best rate available.

However, shopping around doesn’t have to mean spending all day driving around to different mortgage lenders. These days, online tools like Credible can help you compare rates from different vendors quickly and easily, all from the comfort of your own home.

If you're looking to refinance, you can compare lenders and save on interest by filling out your information here.


If you're a first-time homeowner or looking for a second home, you should use an online mortgage calculator to customize your costs. To work toward closing on your dream home, then you'll want to find a cost-saving mortgage. You can also insert what you're looking for below and find the perfect mortgage loan type for you.


Get your credit in order

The strength of your credit card history is another factor that plays into the interest rate you’re given by each lender. Typically, those with the best credit scores can expect to receive the best rates.

For example, based on the current interest rates at the time of publication, a homebuyer with excellent credit (a score of 740+) could get a 30-year fixed-rate loan at an interest rate of 3.25 percent. Meanwhile, a borrower with a good credit score (720-739) could expect to see a rate of 3.38 percent.

Find out what kind of mortgage rates you qualify for within three minutes through Credible's free online tool.


Build up your down payment

For buyers, another way to lower the interest rate you’re given is to take the time to build up your savings account so you have a large down payment. Mortgage lenders usually offer lower mortgage rates to those who have a lower loan-to-value ratio, or who are borrowing less money overall. After all, the less money they lend you in a home loan, the lower the risk of not being repaid.

To that end, you can expect to see a lower interest rate if you’re prepared to come to the closing table with a down payment of 20 percent or more.


Consider a different loan term

Another way for you to lower your interest rate is to choose a different loan term. While taking out a 30-year loan might be considered standard, it is far from the only option. Depending on what your lender offers, you might be able to choose from a 20-year, 15-year, or even a 10-year option.

Keep in mind the shorter your loan term is, the higher your monthly mortgage payment will be. With that in mind,  you should talk to your lender to ensure you can handle the monthly payment before committing to any loan. However, if you feel okay making a higher monthly payment, a shorter loan term is definitely something to consider when purchasing or refinancing your house.


Solidify your income

The last thing that lenders check before determining your mortgage rate is your income and employment history. Put simply, lenders look at your work history over the last two years to get a sense of your income stability. If you have a spotty work history or have been recently unemployed, that may not disqualify you from getting a loan entirely, but you may be charged higher than the average rates.

The bottom line

With all that said, if you’re wondering who gets the absolute best interest rates available, it’s a homebuyer or homeowner who meets the following qualifications: has a credit score of 740+, can put at least 20 percent down, can handle a higher monthly payment in exchange for a shorter loan term, has a solid work history, and made sure to shop around for the best rate.

Based on all the information above, if you think you’re ready to shop around for your interest rate, consider using Credible to help you easily compare rates from the comfort of your own home.

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China stands by pledge to implement US trade deal despite tensions

China on Friday repeated its pledge to implement its landmark trade deal with the US amid growing tensions between the two countries.

“China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits,” premier Li Keqiang said at the annual meeting of China’s parliament in Beijing, according to Bloomberg News.

American and Chinese officials agreed earlier this month to forge ahead with the phase-one deal that President Trump signed in January even as the White House slammed China’s handling of the coronavirus pandemic.

US officials touted progress toward implementing the deal Thursday as they added agricultural products such as blueberries and Hass avocados to the list of items that can now be exported to China. Beijing has also updated its lists of American facilities eligible to export meat and dairy products, officials said.

“China has worked with the United States to implement measures that will provide greater access for US producers and exporters to China’s growing food and agricultural markets,” US Trade Representative Robert Lighthizer said in a statement.

But Trump has said the trade pact “doesn’t feel the same” now that the coronavirus crisis has roiled the global economy. He suggested last week that the US could “cut off the whole relationship” after the administration accused the Chinese Communist Party of trying to cover up the outbreak.

China is now threatening to retaliate if the US passes a law that would let Trump sanction the country over its handling of the virus, according to Singapore’s Straits Times newspaper.

“China will never start trouble but will never flinch when trouble comes its way,” Zhang Yesui, a spokesman for China’s National People’s Congress, reportedly said at a news conference. “We will resolutely defend our sovereignty, security and development interests.”

With Post wires

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