July 31, 2021
Here are updates of two charts I have posted monthly regarding national income and consumer spending during the COVID-19 recession, including new numbers for June and revisions to numbers for prior months.
Personal Income in June was 0.1% greater than in May and 15.4% less than the peak reached in March, which was boosted by the $1.9 trillion federal relief package that was enacted that month. Consumer spending increased by $155.4 billion (1.0%) from May to June, while the saving rate dropped from 10.3% to 9.4%.
On the first chart, the stacked columns show estimated personal income for the U.S. as a whole, by month, from January 2019 through June 2021. 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 pensions, Medicare- and Medicaid-funded healthcare services, stimulus checks); and other income (e.g., interest, dividends and profits of non-corporate business activities, including property rentals).
Personal income in June was $26.1 billion greater than in May: Government social benefits were down by $109.7 billion. Employee compensation was up by $85.9 billion. Income from all other sources was up by $49.9 billion.
Also on the first chart, the black line shows monthly personal consumption expenditures. Again, these numbers are seasonally adjusted annual rates. Consumption expenditures in June 2021 were $155.4 billion more than in May and $986.5 billion (6.7%) more than in February 2020, the last month before the pandemic began to shut down the economy.
The second chart shows the personal saving rate, monthly from January 2019 through June 2021. (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% in February 2020 to an astounding 33.8% in April and then declined in steps to 13.0% in November. The saving rate moved up modestly in December, jumped to 20.2% in January 2021, fell back to 14.0% in February, jumped to 26.9% in March and dropped in steps to 9.4% in June. The total amount saved from April 2020 through June 2021 was $4.00 trillion. Had the saving rate been the average for 2019, 7.6%, the amount saved would have been just $1.73 trillion. Excess saving over the 15 months thus totaled $2.26 trillion.
This month I am adding a third chart showing total government social benefits as a percent of personal income. (Total benefits are the sum of the unemployment insurance and other social benefit numbers shown on the first chart.) In February 2020, prior to the pandemic, government social benefits provided 16.6% of personal income. Federal relief bills took the share to 31.0% in April 2020, to 26.3% in January of 2021 and to 33.3% in March 2021. In June 2021, government social benefits provided 19.5% of personal income. Note the similarity between this graph and the saving rate graph.
The numbers underlying these charts are preliminary estimates that will be revised as more information becomes available to the statisticians at the federal Bureau of Economic Analysis.
The BEA press release is here. A BEA table showing the effects of selected federal pandemic response programs on personal income is here.Categories: Economy.