Personal income in the United States (US) fell $221.8 billion or 1.1 per cent based on the latest estimates released yesterday by that nation’s Bureau of Economic Analysis (BEA).
Disposable personal income (DPI) in November declined $218.0 billion or 1.2 per cent while personal consumption expenditures (PCE) fell by $63.3 billion or 0.4 per cent. Real DPI for November was down 1.3 per cent while Real PCE for the said month fell by 0.4 per cent.
The PCE price index remained unchanged, so too was the PCE price index less food and energy. The decline in personal income in November was primarily attributed to the decreases in proprietors’ income and government social benefits that were partly offset by a rise in compensation.
According to the BEA, “within nonfarm proprietors’ income, the decrease reflected a decline in Paycheck Protection Program loans to businesses. The decrease in farm proprietors’ income reflected a decrease in payments under the Coronavirus Food Assistance Program related to supporting farmers and ranchers impacted by COVID-19 as well as a decline in Paycheck Protection Program loans to businesses.”
The data showed that within government social benefits, “other” social benefits decreased, which primarily reflected a decrease in Lost Wages Supplemental Payments, which is a Federal Emergency Management Agency programme that provides wage assistance to individuals impacted by the pandemic. Within compensation, the main contributor was an increase in wages and salaries in service-producing industries.
Fall off in Real PCE
In November, the real PCE fell by $53.7 billion, revealing a $53.7 billion drop in spending for goods and a $12.1 billion decline in spending on services. Within goods, spending on clothing and footwear and motor vehicles and parts were the main contributor for this decline.
Notably, this decline was offset by an increase in spending for food and beverages purchased for off-premises consumption. Within services, the leading contributors to the decrease were spending on food services and accommodations as well as in household utilities (electricity and gas).Personal outlays fell $66.8 billion in November while personal saving was $2.22 trillion, and the personal saving rate, personal saving as a percentage of disposable personal income, stood at 12.9 per cent.