Savings Rate Remains Elevated in December

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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 $19,568 billion in December. It was up 0.6%, after a 1.3% decline in November and a 0.7% dip in October. This increase in personal income largely came from the gains for government social benefits and compensation of employees. Personal income was 4.1% higher over a year ago.

Real disposable income (income remaining after adjusting for taxes and inflation) inched up 0.2% in December after a dip of 1.5% in November. Real disposable income was 1.9% higher than it was in February, the month before to the onset of the pandemic. Personal consumption expenditures (PCE) slid 0.2% in December, and was still 2.0% lower than a year ago.

 

In December, the gains in personal income and declines in consumer spending drew the personal savings rate up to 13.7%. It was much lower than a record high savings rate of 33.7% in April. Personal savings stood at $2.4 billion (SAAR) in December, still around 71% above the level before the pandemic hit the economy.



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