Update on personal income, consumer spending and saving rates during the Covid-19 recession

By: Kriss Sjoblom
3:34 pm
December 23, 2020

Here are updates of two charts I have previously posted regarding income and consumer spending during the Covid-19 recession, including new numbers for November and revisions to numbers for prior months. Both personal income and personal consumption expenditures were down nationally in November compared to October.

On the first chart, the stacked columns show estimated personal income for the U.S. as a whole, by month, from January 2019 through November 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, personal income was 10.3 percent higher in April than in February, the last month before the Covid-19 recession began. In May, June and July income from unemployment insurance was boosted by the special $600 per week federal UI benefit, which expired at the end of July.

Personal income in November $221.8 billion less than in October. Employee compensation was up by $50.3 billion. Government social benefits were down by $126.6 billion. Profits of non-corporate businesses were down by $159.3 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 November 2020 were $310.6 billion less than in October.

The second chart shows the personal saving rate, monthly from January 2019 through October 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 13.6 percent in October and then to 12.9 percent in November. The latter decline allowed the November reduction in consumption to be smaller than the November drop in income.

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.

The press release is here. A table showing the effects of selected federal pandemic response programs on personal income is here.

Categories: Categories , Economy.