June 25, 2021
According to estimates by the Bureau of Economic Analysis, personal income fell $414.3 billion (2.0%) in May. Personal consumption expenditures (PCE) rose $2.9 billion but disposable personal income (DPI) fell $436.3 billion (2.3%) (less than 0.1%).
In May, real DPI fell by 2.8%, while real PCE fell by 0.4%; goods fell by 2.0%, while services rose by 0.4%. The PCE price index grew by 0.4%. The PCE price index climbed 0.5% excluding food and energy.
BEA noted that, “the decrease in personal income in May primarily reflected a decrease in government social benefits. Within government social benefits, “other” social benefits decreased as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in April. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.”
The $2.9 billion increase in current dollar PCE in May represented an increase in expenditure for services of $74.3 billion, which was mainly offset by a $71.5 billion fall in spending for goods. Increases in service spending were widespread, driven by spending on recreation services, food and accommodation, as well as housing and utilities. The primary contributor to the reduction in goods was a fall in spending on motor vehicles and parts.
Personal spending grew by $5.5 billion in May. Personal saving was $2.29 trillion in May, with a personal saving rate of 12.4% (personal saving as a proportion of disposable personal income).
The PCE price index climbed 3.9% from the previous year in May, showing increases in both goods and services. Energy costs climbed by 27.4%, while food prices increased by 0.4%. Excluding food and energy, the PCE price index climbed 3.4% from the previous year in May.
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