Jump primarily attributed to increases in government social benefit payments to Americans

The United States Bureau of Economic Analysis has estimated that America’s personal  income rose by US$1.95 trillion, a 10 per cent jump, last month.

Disposable personal income (DPI) rose US$1.96 trillion, or up 11.4 per cent, while personal consumption expenditure (PCE) climbed by US$340.9 billion, representing a 2.4 per cent increase.

The US Bureau of Economic Analysis projects that real DPI for January climbed by 11.0 per cent  while real PCE rose 2.0 per cent with goods increasing by 5.1 per cent and services going up marginally by 0.5 per cent.

The PCE price index rose 0.3 per cent, while the PCE price index less food and energy inched up by 0.3 per cent. The rise in personal income in January was primarily attributed to the increases in government social benefits to persons as payments were made to individuals from federal COVID-19 pandemic response programmes. 

There was also an increase in “other” social benefits, reflecting an increase in payments distributed through the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act. The Act provides further relief to States to address the coronavirus pandemic in America.  

Unemployment insurance up in America

According to the Bureau of Economic Analysis, “unemployment insurance also increased, reflecting an increase in pandemic unemployment compensation, including supplemental weekly payments to unemployment beneficiaries re-introduced by the CRRSA Act”.

In January, the current dollar PCE increased by IS$340.9 billion, which meant a US$277.2-billion rise in spending for goods versus a US$63.7-billion increase in spending for services.

Within goods, spending on recreational goods and vehicles and food and beverages were the main contributor to the increase based on Census Monthly Retail Trade Survey data. Notably, within services, the leading contributors to the increase were spending on food services and accommodations.

Moreover, spending for health care led by outpatient services also increased but was partly tempered by a decline in spending for housing and utilities led by electricity and gas based on data from the Energy Information Administration. Personal outlays rose US$348.7 billion in January while personal saving was US$3.93 trillion.

The personal saving rate, personal saving as a percentage of disposable personal income, stood at 20.5% for January