April 2021 Real Income And Expenditures - Inflation Now Impacting

The data continues to be affected by the pandemic, comparisons to the recession one year ago, and now inflation. Inflation is now seriously impacting growth.

Analyst Opinion of Personal Income and Expenditures

The note from the BEA says it all:

The estimate for April personal income and outlays was impacted by the continued government response to COVID-19. Economic impact payments associated with the American Rescue Plan Act of 2021 (which was enacted on March 11, 2021) continued but were at a lower level than in March. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified.

The decrease in personal income in April primarily reflected a decrease in government social benefits (table 3). Within government social benefits, "other" social benefits decreased as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in March. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.

The real issue with personal income and expenditures is that it jumps around because of backward revisions - and one cannot take any single month as fixed or gospel. This month's backward revision:

Estimates have been updated for October through March. For October through December, estimates for compensation, personal taxes, and contributions for government social insurance reflect the incorporation of the mostrecently available fourth-quarter wage and salary data from the Bureau of Labor Statistics' Quarterly Census of Employment and Wages program. Revised and previously published changesfrom the preceding month for current-dollar personal income, and for current-dollar and chained (2012) dollar DPI and PCE, are shown below.

This should be considered a better report than last month.

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