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The US Personal Income Conundrum

This one was a surprise.

With surging unemployment and the near-complete shutdown of several industries, it was logical to assume that personal incomes in the US (as elsewhere) would come down.

The reality? Personal income soared 10.5% in April - the biggest jump this number has seen since the US Bureau of Economic Analysis started compiling the data in 1959!

Go figure. The answer to this puzzle in two words? Uncle Sam.

Incomes went up because of government payouts like the personal stimulus checks and higher unemployment benefits.

Government social benefits accounted for 30%, or $6.3 billion, of personal income in April. That’s up from a monthly average of 17%—or $3.2 billion—in the previous seven months.

However due to restrictions in various states as well as consumer anxiety, US Consumer spending fell 13.6% in April.

The net result: savings rate up to 33% in April from 12.7% AND a lot of consumer spending power pent up, waiting to be let out.

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From the desk of

Shankar Sharma & Devina Mehra

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years 

https://firstglobalsec.com

 

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