MACRO: US Personal Income skyrockets on stimulus checks

Personal income jumped 21.1 % MoM in March, rebounding from a revised 7% drop in the previous month and above analysts’ expectations of a 20.3 % increase.  Personal spending rose 4.2 % in March 2021, following a 1.0 % decline in February and slightly beating market consensus of a 4.1 % increase. Spending on goods was supported by both nondurable, led by “other” nondurable goods, which includes recreational items like games, toys, and hobbies, and durable goods, in particular motor vehicles and parts. In addition, the largest contributor to the increase in spending on services was spending for food services and accommodations.

The PCE price index for March increased 0.5% MoM and 2.3% on a YoY basis which is the highest since July 2018. Fed's favourite inflation metric- the core PCE, which excludes food and energy, rose 0.4% for March and 1.8% YoY. 

Those figures reflect an increase in government social benefits as most of the Americans received stimulus checks under The American Rescue Plan Act.

Today’s figures showed the largest increase in consumption since June 2020 and the biggest rise of personal income on record. Source: Bloomberg via ZeroHedge

Today's data also showed just how increasingly more reliant on the US government the population has become. Personal Current Transfer payments, which are government handouts such as unemployment benefits, welfare checks, rose in March to a record number of $8.1 trillion annualized, from $4.1 trillion recorded in February. Before the pandemic this figure averaged to $3.2 trillion. This means that a record 34% of all income comes from the government. For comparison, during the 1950s and 1960s, Government Transfer Payments accounted only for 7%.

Government Transfer payments reached new record high. Source:  Bloomberg via ZeroHedge