Personal income rose slightly by 0.2% on a month-over-month basis after a 0.5% increase in January, according to the most recent data release from Bureau of Economic Analysis. Personal income increased $23.7 billion, which was mostly driven by the rise in interest income ($7.4 billion), rental income ($6.7 billion), and personal transfers ($14.1 billion).
Disposable personal income – income remaining after deducting personal income taxes – continued its steady growth, along with a modest increase in personal consumption expenditures. Compared to February 2015, disposable personal income rose by 3.7% and personal consumption expenditures grew by 3.8%.
In February, 5.4% of disposable income went to personal savings, a slight uptick from a savings rate of 5.3% in January. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. However, this process of deleveraging held back GDP growth due to reduced consumption.