October 30, 2020
Here are updates of two charts regarding income and consumer spending during the Covid-19 recession, including new numbers for September and revisions to numbers for prior months, which were released today by the federal Bureau of Economic Analysis (BEA).
On the first chart, the stacked columns show estimated personal income for the U.S. as a whole, by month, from January 2019 through September 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). The unusually large value of other government social benefits for April reflects the government stimulus checks mailed to low- and moderate-income households. With these payments, April personal income was 10.2 percent higher in April than in February, the last month before the Covid-19 recession began.
Personal income in September 2020 was 3.6 percent higher than in February but 1.6 percent lower than in July. The reason for the July to September decline is the expiration of the special $600 per week federal UI benefit at the end of July. Total government benefits in September were 29.9 percent greater than in February, but 37.2 percent less than in April. Unemployment insurance payments in September were 72.3 percent less than in July. Employee compensation in September was 2.6 percent less than in February, but 0.8 percent greater than in August.
Also on the first chart, the black line shows monthly personal consumption expenditures. Again, these numbers are seasonally adjusted annual rates. Consumption expenditures in September 2020 were 2.0 per cent less than in the preceding February, despite the 3.6 percent increase in personal income over this period. Between August and September, personal consumption expenditures increased by 1.4 percent while personal income increased by 0.9 percent.
The second chart shows the personal saving rate, monthly from January 2019 through September 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 in steps to a still quite high 14.3 percent in August.
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.Economy.