U.S. Personal Income increased $116.6 billion in December 2020

January 29, 2021

In December, personal income rose $116.6 billion (0.6%) in the U.S, according to estimates released by the Bureau of Economic Analysis. Disposable personal income (DPI) rose $111.6 billion (0.6%) and personal consumption expenditures (PCE) fell $27.9 billion (0.2%).

Real DPI climbed 0.2% in December, and Real PCE fell 0.6%. The PCE price rose 0.4%. The PCE price index less food and energy increased 0.3%.

The rise in personal income in December was primarily attributed to the increases in government social benefits, compensation, and personal dividend income that were partly offset by a decline in proprietors’ income. Moreover, according to BEA, “within government social benefits, unemployment insurance increased reflecting an increase in pandemic unemployment compensation, the supplemental weekly payments to unemployment beneficiaries re-introduced through the CRRSA Act. There was also an increase in “other” social benefits, reflecting an increase in payments from the Provider Relief Fund to nonprofit institutions. Within compensation, the main contributor was an increase in wages and salaries in service-producing industries based on data from the Bureau of Labor Statistics Current Employment Statistics. The increase in personal dividend income reflected data from company financial reports. Within proprietors’ income, both farm and nonfarm decreased based on declines in Paycheck Protection Program loans to businesses. Farm proprietors’ income was also impacted by a decrease in payments under the Coronavirus Food Assistance Program.”

In December, the real PCE fell by $79.8 billion, revealing a $71.9 billion decrease in spending for goods and a $17.6 billion decrease in spending on services. Within goods, spending on durable goods and nondurable goods were the main contributor to the decline. Notably, this was partly offset by an increase in spending for motor vehicles and parts led by new light trucks. Within services, the leading contributors to the decrease were spending on food services and accommodations as well as in spending for health care led by hospitals but was partly tempered by a rise in spending for household utilities.

Personal outlays fell $39.2 billion in December while personal saving was $2.38 trillion, and the personal saving rate, personal saving as a percentage of disposable personal income, stood at 13.7%.

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