According to data released by the Bureau of Economic Analysis (BEA), personal income fell sharply in March, to a seasonally adjusted annual rate (SAAR) of $18,693 billion. The decline in personal income of -2%, was largely the result of losses in compensation, due to massive layoffs during the second half of March when the ‘stay-at-home orders’ were issued to slow the spread of the COVID-19 virus. The BEA is reporting that real disposable income (income remaining after adjusting for taxes and inflation went down -1.7%, after posting a gain in February of 0.34%. Personal consumption expenditures (PCE), which makes up more than two thirds of the U.S. overall economy fell -7.5% in March, which is the steepest decline on record since 1959. On a positive note, personal saving increased to $2.17 SAAR, accounting for a 13.1% rise in disposable income. This record high savings rate reflects a slowdown in spending and economic growth in March due to the COVID-19 pandemic.
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Personal Income and Outlays: March 2020