US income dropped 1% in Sept as pandemic aid ended: govt
Oct 30, 2021 - 09:44 AM
WASHINGTON — Americans saw their incomes drop by a full percentage point in September as pandemic aid programs to support the unemployed expired that month, according to Commerce Department data released Friday.
While the decline in income was greater than expected, the report said personal consumption expenditures (PCE) increased by a better-than-forecast 0.6 percent, as consumers channeled their money toward services like health care, restaurants and hotels.
“As we approach 2022, the economy is regaining momentum. An improving health situation, rising mobility, improving employment trends and solid household finances should support consumer spending growth,” wrote Lydia Boussour of Oxford Economics, predicting stronger outlays in the last quarter of 2021.
Meanwhile the PCE price index rose 4.4 percent in September compared to September 2020, slightly faster than August’s rate as the world’s largest economy continues to grapple with strong demand and supply chains snarls that have pushed inflation higher.
That was the index’s biggest jump since January 1991, but if volatile food and energy prices are excluded, the year-on-year increase was unchanged at 3.6 percent in September.
The decrease in income came as US government programs offering aid to the long-term unemployed and freelance workers during the pandemic ended.
The report also pointed to the tapering of programs including government stimulus checks, support to health care workers and loans to small businesses.
Spending rose by $93.4 billion overall, $63.6 billion of which went to services while $29.9 billion went to goods.
Businesses that benefited from the services spending included doctors and other health care workers, as well as restaurants and hotels, two industries bouncing back from widespread disruptions caused by the pandemic.
Food and drink in addition to pharmaceuticals and gasoline — where prices have jumped this year in line with global energy prices — were among the most-purchased goods last month, the data said.
Overall goods spending was held back by a decline in motor vehicle purchases as automakers struggle to keep their factory lines going amid a global shortage of crucial semiconductors.
On a month-on-month basis, the PCE price index rose 0.3 percent, the same level as August. Minus food and energy prices, it was up 0.2 percent, just below the level the month prior.