"This is the basis for believing that spending will rebound strongly as lockdowns are eased, but it will also make it easier for Republicans in the Senate to keep pushing back on the idea of further stimulus, for a while at least", said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Friday note.
The plunge beat economists expectations for a 12.6 percent drop and outpaced March's 6.9 percent decrease - the previous record. Spending was depressed by a decrease in outlays on healthcare as dental offices closed and hospitals postponed elective surgeries and non-emergency visits to focus on patients suffering from COVID-19. Americans spent less less at restaurants and on hotels. Spending on food and beverages fell in April.
The wider goods trade deficit is likely a drag on second quarter gross domestic product, which economists expect could drop at as much as a 40% rate, a pace not seen since the 1930s.More news: Harvey Weinstein raped four more women according to new lawsuit
A sharp decrease in spending could have a devastating impact on the USA economy as consumption is responsible for roughly two-thirds of gross domestic product.
Another reason for the spending drop may be rising joblessness.
But the economic slump could be close to bottoming as businesses reopen after shuttering in mid-March to slow the spread of Covid-19.More news: Pablo Escobar's brother sues Apple for $2.6B, alleges 'lax' iPhone security
The personal savings rate reached a record 33 percent in April, up from just 12.7 percent in March, the U.S. Bureau of Economic Analysis said Friday. That was the weakest reading since September 2001 and followed an unchanged reading in March. That was the smallest gain since December 2010 and followed a 1.7 per cent increase in March.
The PCE price index - the Federal Reserve's preferred gauge of consumer prices - gained 0.5% on the year. The US central bank has a two per cent inflation target. Those included $1,200 checks distributed to taxpayers under the $2.2 trillion CARES Act and a $600-a-week boost to unemployment benefits. But business closures weighed on wages, which dropped 8.0% in April after falling 3.5% in March.More news: Messis back La Liga to restart on June 11 president confirms