The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income decreased in October to a seasonally adjusted annual rate (SAAR) of $19,726 billion. It declined 0.7% in October, primarily as a result of the tapering of government economic recovery payments. However personal income from wages and salaries inched up 0.7%, as the economy continued to reopen.
Real disposable income (income remaining after adjusting for taxes and inflation) was down 0.8% in October after an increase of 0.6% in September. Despite the drop in October, real disposable income was 4.1% higher than it was in February, the month before to the onset of the pandemic. Personal consumption expenditures (PCE) rose 0.5% in October. However, PCE was still 0.6% lower than a year ago.
In October, the rise in consumer spending and the drop in personal income drew the personal savings rate down to 13.6%, compared to a record high savings rate of 33.7% in April. Personal savings stood at $2.4 billion (SAAR) in October, still around 71% above the level before the pandemic hit the economy.