The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income increased to a seasonally adjusted annual rate (SAAR) of $20,043 billion. It was up 0.4%, after a 1.0% decline in June. This increase in personal income largely came from the gains of wages and salaries ($149.9 billion) as the economy continued to reopen in July. Government social benefits, especially the pandemic unemployment insurance, decreased over the same time. It was in line with the decrease in jobless claims since July.
Real disposable income (income remaining after adjusting for taxes and inflation) dipped 0.1% in July after decreasing 1.8% in June. After a record plunge in April, personal consumption expenditures (PCE) rose 1.9% in July. However, PCE was still 2.8% lower than a year ago.
In July, the rise in consumer spending and the drop in real personal income drew the personal savings rate down to 17.8%, compared to a record high savings rate of 33.7% in April. Personal savings remained elevated at an annual pace of $3,186.7 billion, albeit significantly lower than in the second quarter of 2020.