Income Surges as Spending Drops Most on Record


Covid-19 had its hand in one of the most extreme economic reports ever.

The BEA's Personal Income and Outlays Report has the curious details of an unexpected ride.

Income and Outlays

  • Income: +10.5%
  • Disposable Personal Income: +12.9%
  • Real Disposable Income: +13.4%
  • Personal Consumption Expenditures: -13.6%
  • Real Personal Consumption Expenditures: -13.2%


  • PCE Price Index: -0.5%
  • PCE Price Index Excluding Food and Energy: -0.4%
  • PCE Price Index Year-Over-Year: +0.5%
  • PCE Price Index Year-Over-Year Excluding Food and Energy: +1.0%

Consumer Spending Falls a Record 13.6%

The Wall Street Journal reports Consumer Spending Falls a Record 13.6%

Personal income, which includes wages, interest and dividends, increased 10.5% in April, the Commerce Department reported Friday. The jump reflected a sharp rise in government payments through federal rescue programs, primarily one-time household stimulus payments of $1,200. Unemployment insurance payments also rose sharply in April, helping make up for some of the 8% decline in wages and salaries tied to job losses.

The April drop in spending was the steepest for records tracing back to 1959. Weak April spending adds to the evidence that the U.S. economy is in for a long, slow recovery. 

Consumers pulled back on services, cutting spending on restaurants and hotels by half compared with April 2019. Health-care expenditures fell nearly 40% from a year ago.

Stimulus Checks

The stimulus checks of $1,200 are one time and the effect will roll off. 

The WSJ cites a study by the Chicago Fed that consumers spent almost half of their federal stimulus checks in the two weeks after receiving them.

Check distribution was uneven. People received a check if they were below a certain income level whether or not they lost any income to Covid-19.

Mortgage and auto loan forbearance plans surged despite the alleged increase in income.

What Did Economists Expect?

The Bloomberg Econoday consensus estimate was for personal income to sink 6.0%, not rise 10.5%.

So if you were shocked by this report, you were not the only one.

Revision Coming?

Covid-19 Impact on Income and Outlays

Perhaps this jump in income is really a mirage. 

The BEA notes "The full economic effects of the  COVID-19 pandemic cannot be quantified in the personal income and outlays estimate for April because the impacts are generally embedded in source data and cannot be separately identified."

As with the unemployment rate, wonders if the BEA as with the BLS is posting known unemployment rate garbage. 

6.4 Million Discrepancy Between Employment and Unemployment

For details on the BLS posting admittedly bogus numbers, please consider  A 6.4 Million Discrepancy Between Employment and Unemployment

At Least for a While, It Pays Better to Be Unemployed

Returning back to the income discrepancy mote that for some, At Least for a While, It Pays Better to Be Unemployed. 


Comments (19)
No. 1-8

Single mothers with kids worried about expenses. Where are the daddies? And why are these legions of analysts and economists who are always commenting on these hapless folks not in the fishbowl themselves? Aneta Markowska, recently laid off as chief financial economist for the investment bank Jefferies, said "No one had any more use for my meaningless drivel, and as I am certainly not an essential worker at all...."


This mirrors my experience. I'm saving way more.
Not using a dog walking service and making my own lunches has been huge


Better keep saving, everything is about to get much more expensive. Not just because of scarcity, but also because every business in the world is about to revamp their way of doing business with an eye toward controlling outbreaks.

Human beings tend to prepare for the last war. Businesses are drawing up plans for their Maginot lines now.

Ian Alexander
Ian Alexander

FRED shows personal income increased by almost 2 trillion. Even using the entire population of the US (320m) that's over $6,000 per person. And that's including everyone who didn't work before this. How is that even possible? What am I getting wrong?

Tony Bennett
Tony Bennett

"income jumped 10.5% in April, likely from the stimulus checks and unemployment aid."


You think?

A glance at the report reveals wages and salaries (SAAR):

February ... $9,554 billion
March ... $9,222 billion
April ... 8,482 billion

Main Street knows the deal. Gain (one time?) attributed to fedgov ... best to save $$s until smoke clears and wages bounce back.


so many have a chunk of change parked at their banks earning zero interest. hope the banks remain solvent.


Where does the Commerce Department get this data? Income, Spending, etc.


If this weren't such a sad and scary time this would almost be funny. The Republicans don't want to give any more money to starving Americans because they want to force them to go back to work. They think that the economy will spring back and help Trump in November. However, just the opposite is happening. People are waiting for the next round of infections and hospitalizations and are saving EVERY penny they can so they can feed and house their families. This drop in consumer spending is what is going to keep the economy in the doldrums for a long time to come.

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