U.S. personal income continues to move higher despite the ongoing economic disruptions and unemployment caused by COVID-19. Real disposable personal income (inflation adjusted) was up 11.4 percent in January compared to December (Figure 2). Personal income consists of total earnings due to wages, investments, and other ventures. Spikes in personal income are evident in March of last year and January of this year due to the stimulus payments provided in the COVID-19 assistance packages.
Taxpayers received $1,200 per person in the first relief package, and $600 per person in the second one. For persons who did not lose a job, the vast majority, the assistance simply boosted income. It appears most people deposited the increased income into savings. The Economist reports that excess savings reached $1.6 trillion last month.
Expect another spike in personal income this month resulting from the most recent COVID-19 assistance package providing stimulus payments of $1,400 per person. For a household of four, this would amount to $5,600 in payments. The growth in income, along with the reopening of the nation’s hospitality sector, bodes well for the state’s livestock sector. Higher income levels mean consumers tend to eat out more and demand more higher-valued cuts.
Figure 2. Total. U.S. Real Personal Income
Source: FRED Economic Data, Federal Reserve Bank of St. Louis