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USA | Nov 3, 2020

U.S. personal income rose $170.3 billion in September 2020

/ Our Today

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 By Durrant  Pate

In spite of the slowdown in economic activity caused by COVID-19, personal income in the United States rose US$170.3 billion or 0.9 per cent last month.

The estimates released by the US Bureau of Economic Analysis (BEA) shows that Disposable Personal Income (DPI) increased US$150.3 billion or 0.9 per cent while Personal Consumption Expenditures (PCE) rose by US$201.4 billion or 1.4 per cent. This is good news for American businesses, who are preparing for more sales given the positive development.

The US BEA reports that real DPI climbed 0.7 per cent in September as real PCE rose 1.2 per cent. The PCE price index increased 0.2 per cent while the PCE price index less food and energy rose 0.2 per cent.

The rise in personal income in September was primarily attributed to the increases in proprietors’ income, compensation of employees, and rental income of persons that were partly offset by a decrease in government social benefits. According to the US economic data agency, “within compensation, government wage and salary disbursements decreased US$7.4 billion in September, following an increase of US$23.9 billion in August”.

The data reveals that temporary and intermittent Census decennial workers boosted government wages and salaries by US$9.3 billion in September after adding US$10.8 billion in August. Within government social benefits, unemployment insurance benefits decreased while “other” social benefits increased.

The decline in the unemployment insurance was due mainly to a decrease in Pandemic Unemployment Compensation, which provided weekly supplemental payments of US$600 that expired on July 31. Within “other” social benefits, there was an increase in Lost Wages Supplemental Payments, a Federal Emergency Management Administration program that provides wage assistance to individuals impacted by the pandemic.

In September, the real PCE rose by US$159.2 billion, revealing a US$109.9 billion increase in spending for goods and a US$61.0 billion increase in spending on services. Within goods, spending on clothing and footwear and motor vehicles and parts were the main contributor to the rise.

Within services, the leading contributors to the increase were spending on health care as well as recreation services. Personal outlays rose US$217.5 billion in September while personal saving was US$2.51 trillion, and the personal saving rate, personal saving as a percentage of disposable personal income, stood at 14.3 per cent.

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