Personal Income Increased 0.4% in July, Impacted by Spread of COVID-19

Personal income increased $70.5 billion (0.4 percent) in July according to estimates released today by the 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 (tables 5 and 7). The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

The increase in personal income in July was more than accounted for by compensation of employees as portions of the economy continued to reopen (table 3). 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. For more information, see “How will federal government responses to the COVID-19 pandemic affect unemployment insurance benefits?”.

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 (table 7). 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 (table 3). 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 (table 1).

Updates to Personal Income and Outlays

Estimates have been updated for January through June. For January through March, estimates for wages and salaries, personal taxes, and contributions for government social insurance reflect the incorporation of the most recently available first-quarter wage and salary data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) program. Revised and previously published changes from the preceding month for current-dollar personal income, and for current-dollar and chained (2012) dollar DPI and PCE, are shown below.