June 21, 2021

U.S. Personal Incomes Soar by Most on Record on Fiscal Stimulus

U.S. personal incomes soared in March by the most in monthly records back to 1946,…

U.S. personal incomes soared in March by the most in monthly records back to 1946, powered by a third round of pandemic-relief checks that also sparked a sharp gain in spending.

The 21.1% surge in incomes followed a 7% decline in February, Commerce Department figures showed Friday. Purchases of goods and services, meanwhile, increased 4.2% last month, the most since June.

The increase in personal spending and incomes provides the economy a solid hand off heading into the second quarter after a robust pace of growth at the start of the year.

Economists projected a 20.3% jump in incomes and a 4.1% gain in personal outlays, according the Bloomberg survey medians.

The March data showed transfer receipts that include stimulus checks and unemployment aid nearly doubled from a month earlier to nearly $8.2 trillion. Wages, meanwhile, rose modestly in March.

Inflation-adjusted personal spending increased 3.6% in March after a 1.2% drop a month earlier. Goods outlays climbed 7.3%, while spending on services rose 1.7%.

The personal savings rate jumped to 27.6% from 13.9% in February. Disposable income, which exclude taxes and are adjusted for inflation surged 23% in March.

A separate report on Thursday showed that gross domestic product expanded at a 6.4% annualized rate in the first quarter, driven by the second-fastest pace of personal consumption since the 1960s.

With spending on the rise, more cash in people’s bank accounts and vaccinations driving reopenings, economic growth is poised to further accelerate in the coming months.

Inflation Metrics