A fresh round of government stimulus checks sent personal income up to its biggest monthly gain since April 2020 though inflation remained tame, the Commerce Department reported Friday.
Personal income jumped 10% after a 0.6% increase in December. That was even higher than the 9.5% Dow Jones estimate.
The gain came from the issuance of $600 stimulus payments that Congress approved for millions of Americans, along with enhanced unemployment benefits. Consumers took those checks and spent them quickly, sending retail sales surging and pushing overall expenditures up 2.4% for the month, a touch below the estimate of 2.5%.
The American economic recovery came perilously close to falling off a cliff at the end of last year. But government aid arrived just in time to prevent a disaster — and possibly paved the way for a dynamic rebound.
Personal income surged a remarkable 10 percent in January, the Commerce Department reported on Friday. Spending increased last month, too, by a healthy 2.4 percent, largely fueled by a rise in purchases of goods.
The report was the latest sign of the economy’s slow but steady march forward after a series of setbacks.
Personal income soared by 10% from December 2020 to January 2021 thanks in large part to government stimulus benefits, according to a new analysis from the U.S. Bureau of Economic Analysis (BEA).
The December 2020 Covid-19 relief bill provided $600 stimulus payments for many individuals and extended key federal unemployment benefits. The BEA finds those two social benefits “more than account” for the rise in income in January.
Many Americans put some of that extra income to good use right away: Consumer spending increased by 2.4% in January, with an estimated $277.2 billion more going to durable goods like vehicles
The economy added a meager 49,000 jobs in January and the unemployment rate fell to 6.3 percent as the size of the labor force shrank, signaling the ongoing fragility of the recovery. Economists had expected 50,000 jobs to be added and the jobless rate to remain unchanged.
January’s report, the first monthly release under President Joe Biden, is an improvement from December, which saw a reversal of 227,000 jobs. However, it does not even capture the millions of people economists estimate have dropped out of the labor force and are no longer looking for work. Nearly 18 million Americans continue
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