The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income increased 0.5% in March after a 0.7% gain in February. Gains in personal income are largely driven by increases in compensation of employees. However, it was 11.6% lower than a year ago when US government implemented stimulus packages to cope with COVID-19 crisis. Real disposable income, income remaining after adjusted for taxes and inflation, slipped 0. 4% in March after increasing 0.1% in February.
Personal consumption expenditures (PCE) climbed 1.1% in March after a0.6% increase in February. Real spending, adjusted to remove inflation, increased 0.2% in March after a modest 0.1% increase in February.
As a result of a boost in consumption expenditures and a slower growth of income, the savings rate declined to 6.2% in March. It was the lowest rate since 2014.