Personal Incomes Rises 10% in January Thanks to Stimulus Payments

A deeper examination of recently released data from the Bureau of Economic Analysis (BEA) reveals that personal income rose in January to a seasonally adjusted annual rate (SAAR) of $21.454 billion. The 10% increase in personal income was largely due to the impact of the Coronavirus Response and Relief Supplement Appropriations (CRRSA) Act, which included $1,660.9 billion in economic impact payments. In January real disposable income (income remaining after adjusting for taxes and inflation) was up 11% after a -0.2% increase in December 2020, marking the largest monthly gains since May 2020. Personal consumption expenditures (PCE) rose 2.4% in January after a decline of -0.4% in December 2020. Finally, in January, the rise in personal income pushed the personal savings rate to 20.5%, compared to a record high savings rate of 33.7% in April 2020. Personal savings remained elevated at an annual pace of $3.93 billion, the highest level after May 2020.