Fall primarily attributed to decreases in government social benefits

In April, personal income fell US$3.21 trillion (13.1 per cent) in the United States (US), according to estimates released by the Bureau of Economic Analysis.

Disposable personal income (DPI) decreased US$3.22 trillion (14.6 per cent) and personal consumption expenditure (PCE) climbed US$80.3 billion (0.5 per cent). Real DPI declined 15.1 per cent in April and Real PCE fell 0.1 per cent with goods decreasing 1.3 per cent and services increasing 0.6 per cent.

The PCE price index rose 0.6 per cent. The PCE price index less food and energy increased 0.7 per cent. The fall in personal income in April was primarily attributed to the decreases in government social benefits.

There was also a decrease in “other” social benefits, reflecting a decrease in economic impact payments made to individuals from the American Rescue Plan Act of 2021. The US BEA reports that, “unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation programme”.

More spending taking place on services rather than on goods

In April, the current dollar PCE increased by US$80.3 billion, which meant a US$112.6 billion rise in spending for services versus a US$32.3 billion decrease in spending for goods. Spending on recreation services, as well as food and lodging, were the two major drivers to the growth in services.

A decline in nondurable goods was somewhat offset by a rise in durable items within goods. The decline in nondurable goods was broad with food and drinks leading the way.

The rise in durable goods was accounted for by an increase in motor vehicles and parts. Personal outlays rose US$82.8 billion in April while personal saving was US$2.81 trillion while the personal saving rate, personal saving as a percentage of disposable personal income, stood at 14.9 per cent