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The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income fell sharply in March to a seasonally adjusted annual rate (SAAR) of $18,693 billion. The 2% decline in personal income was largely due to losses in compensation, a result of massive layoffs during the second half of March when the ‘stay-at-home’ orders were issued to deal with the COVID-19 pandemic. Real disposable income (income remaining after adjusting for taxes and inflation) went down by 1.7% after a 0.34% gain in February.

Personal consumption expenditures (PCE) plunged 7.5% in March, the steepest monthly decline on record since 1959, as businesses are shut down and households are complying with the ‘stay-at-home’ orders. The sharp decline in personal consumption expenditures, which make up more than two thirds of the economy, pulled down the gross domestic product in March. However, BEA pointed out that “the full economic effects of the COVID-19 pandemic cannot be quantified in the Personal Income and Outlays estimate for March 2020 because the impacts are generally embedded in source data and cannot be separately identified.”

In March, personal savings increased to $2.17 billion (SAAR), accounting for 13.1% of disposable income. This record high savings rate reflects a slowdown in spending and economic growth during the COVID-19 pandemic.