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Disposable income surged a record 23.6% in March as another round of relief checks poured into Americans' bank accounts. Consumer spending rose a more modest 4.2%.
https://www.bea.gov/news/2021/personal-income-and-outlays-march-2021
https://www.bea.gov/news/2021/personal-income-and-outlays-march-2021
Total consumer spending (not adjusted for inflation) is now above its prepandemic level. Income, meanwhile, is an insane 30% above where it was in February 2020.
No mystery as to what's driving the gains in income: government aid. Compensation of employees rose just 1%.
The result of the huge surge in income is an enormous pile of savings -- $6 trillion in March. As always, though, a crucial caveat: Those savings are not evenly distributed. Plenty of people who were wiped out by the pandemic.
We got another big increase in goods spending in March, consistent with what we saw in yesterday's GDP report. But there was some sign of life in services spending too as the vaccine rollout began to take hold. Suspect we'll see more of that in the April data.
Demand for durable goods has been consistently strong during the pandemic, and that remained true in March. Strong nondurable demand too, though.
