BEA Report Shows US Personal Income Up More Than Expected

U.S. personal income in the month of December rose more than anticipated, according to the latest report from the Bureau of Economic Analysis (BEA) on Friday (Jan. 29), while personal spending went down a bit.

Personal income went up 0.6 percent month on month in December, ahead of market forecasts of a 0.2 percent increase. The increase was credited to more government transfer receipts (up 2.3 percent month on month), income receipts from assets (2.0 percent), and compensation (0.5 percent). Disposable personal income (DPI) went up 0.6 percent to $111.6 billion and personal consumption expenditures (PCE) decreased 0.2 percent to $27.9 billion.

Personal savings as a percentage of disposable income escalated to 13.7 percent in December from 12.9 percent in November.

Economists had expected personal income to go up by 0.1 percent compared to the 1.1 percent drop in November, according to a Nasdaq report on Friday.

Gregory Daco, Chief U.S. Economist at Oxford Economics, said in the report that he estimates American households stockpiled $1.6 trillion in savings since the pandemic hit the country in March 2020.

“This initially reflected savings from fiscal transfers in the CARES Act — checks to families and expanded jobless benefits,” Daco told Nasdaq. “Now they entirely reflect higher-income families’ lack of opportunity to spend on services amid steady finances.”

U.S. gross domestic product (GDP) went up 4 percent in the fourth quarter of 2020, missing forecasts of 4.3 percent. The third quarter escalated 33.4 percent, while the second quarter decreased 31.4 percent. The full-year GDP shrank 3.5 percent, the first economic contraction since 2009 and the biggest drop since 1946.

Earlier this week Bank of America CEO Brian Moynihan said he thinks the U.S. economy is better off than it was in the first weeks and months of COVID-19. He noted that people are spending differently amid the pandemic.

The Dec. 23 BEA report showed that personal income went down 1.1 percent to $221.8 billion in November, while disposable personal income dropped 1.2 percent to $218 billion. Personal consumption expenditures dipped 0.4 percent to $63.3 billion.