Personal income, consumer spending and saving rates during the Covid-19 recession

By: Kriss Sjoblom
2:22 pm
September 12, 2020

Here are two very interesting charts regarding income and consumer spending during the Covid-19 recession.

On the first chart, the stacked columns show estimated personal income for the U.S. as a whole, by month, from January 2019 through July 2020. The numbers are seasonally adjusted annual rates. I have broken personal income into four parts: employee compensation (wages and salaries, and supplements); unemployment insurance benefits; other government social benefits (e.g., social security, Medicare and Medicaid); and other income (e.g. interest, dividends and profits of non-corporate business activities, including property rentals).

Personal income in July 2020 was 4.8 percent higher than in the preceding February (the last month before the Covid-19 recession began). Increases in unemployment insurance and other government social benefits (together up 53.7 percent over the period) more than offset the decline in employee compensation (down 4.6 percent). The unusually large value of other government social benefits for April reflects the government stimulus checks mailed to low- and moderate-income households.

Personal income for August, which will be reported on October 1, should be somewhat lower than that for July due to the expiration of the special $600 per week federal UI benefit at the end of July.

Also on the first chart, the black line shows monthly consumer outlays. Again these numbers are seasonally adjusted annual rates. Despite the increase in personal income, consumption in July 2020 was 5.4 per cent less than in the preceding February.

The second chart shows the personal saving rate monthly from January 2019 through July 2020. (The saving rate is equal to the amount of personal saving divided by the amount of disposable personal income. (Disposable personal income equals personal income less personal current taxes, which are mostly income taxes).

The saving rate jumped from 8.3 percent in February to an astounding 33.7 percent in April and then declined to a still quite high 17.8 percent in July.

All of these numbers are preliminary estimates that will be revised as more information becomes available to the statisticians at the federal Bureau of Economic Analysis.

Categories: Economy.