E-Paper
Soaring US incomes help drive biggest spending gain since June
The surge in incomes, and expectations of even more stimulus, is seen providing additional fuel for consumers at a time of pent-up demand in the wake of pandemic-related disruptions to the service economy.
US personal incomes soared in January as Americans received another round of pandemic-relief checks, helping to re-charge the economy with the strongest spending advance in seven months.
The 10% gain in incomes exceeded forecasts followed a 0.6% gain in December, a Commerce Department report showed Friday. Purchases increased 2.4% from the prior month, following a downwardly revised 0.4% decline in December.
The surge in incomes, and expectations of even more stimulus, is seen providing additional fuel for consumers at a time of pent-up demand in the wake of pandemic-related disruptions to the service economy.
The January increase reflects the $900 billion pandemic aid package passed in December. The bill provided direct checks to millions of Americans and supplemented jobless benefits with an extra $300 a week payment. While many have saved the government support, the robust increase in spending shows others are spending it.
Lawmakers are moving forward with President Joe Biden’s $1.9 trillion aid plan that has the potential to drive even more income growth. Another round of stimulus checks paired with a child tax credit and an increase in weekly unemployment benefit payments would buoy disposable income in the coming months.
The personal saving rate rose to 20.5%, the highest since May.
Government transfer payments rose 52% in January from the prior month, reflecting both stimulus checks and the supplemental $300 weekly jobless benefit payments.
Inflation-adjusted personal spending rose 2% after a 0.8% decline. Goods spending jumped 5.1%, while outlays for services advanced 0.5%.
