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Personal Income Rose in July 2020

Personal income increased $70.5 billion (0.4 percent) in July according to estimates released by the government’s…

  • September 17, 2020

Personal income increased $70.5 billion (0.4 percent) in July according to estimates released by the government’s Bureau of Economic Analysis.

Disposable personal income (DPI) increased $39.9 billion (0.2 percent) and personal consumption expenditures (PCE) increased $267.6 billion (1.9 percent).

Real DPI decreased 0.1 percent in July and Real PCE increased 1.6 percent. The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

The July estimate for personal income and outlays was impacted by the response to the spread of COVID-19. Federal economic recovery payments continued but were at a lower level than in June, and government “stay-at-home” orders lifted in some areas of the country.

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

The increase in personal income in July was more than accounted for by compensation of employees as portions of the economy continued to reopen. Proprietors’ income and rental income of persons also contributed to the increase.

Partially offsetting these increases were decreases in government social benefits and income on assets. Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, decreased in July.

The $200.6 billion increase in real PCE in July reflected an increase of $82.1 billion in spending for goods and a $121.2 billion increase in spending for services.

Within goods, the leading contributor to the increase was spending for new motor vehicles, based primarily on unit sales from Ward’s Automotive Sales Report.

Within services, the leading contributors to the increase were spending for health care as well as food services and accommodations. Within health care, both hospital and outpatient services increased, based on volume data for hospital services and outpatient visits as well as credit card data.

Spending for food services and accommodations was based on Census Monthly Retail Trade Survey data and Smith Travel Research data. Detailed information on monthly real PCE spending can be found on Table 2.3.6U.

Personal outlays increased $270.6 billion in July. Personal saving was $3.19 trillion in July and the personal saving rate—personal saving as a percentage of disposable personal income, was 17.8 percent.