The Dept.of Commerce released the April Personal Income and Outlays report today. Could have been worse. Personal income was $12,091 billion, an increase of $58.2 billion, or +0.5% over March. Disposable personal income (DPI) increased $121.8 billion, or +1.1% in April. Personal consumption expenditures (PCE) decreased $5.4 billion, or 0.1%. Real disposable income increased +1.1% in April.
The April change in disposable personal income (DPI) – personal income less personal current taxes – was boosted as a result of government stimulus measures, which reduced personal taxes and increased social benefit payments. Even without these factors, however, disposable personal income increased $77.1 billion, or +0.7%, in April.
The increase in peronal income did not come from higher compensation. Private wage and salary disbursements decreased $1.3 billion in April. Goods-producing industries’ payrolls decreased $11.4 billion; manufacturing payrolls decreased $3.7 billion. Services-producing industries’ payrolls increased $10.1 billion. Government wage and salary disbursements increased $4.4 billion.
It was the temporary tax relief. Personal current taxes ($1182.4 billion) decreased $63.6 billion in April, compared with a decrease of $34.1 billion in March; down sharply from $1517.7 just six months ago. The Making Work Pay Credit provision of the stimulus plan reduced personal taxes $49.8 billion in April and $11.2 billion in March. The provision allows a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns.
Sustainable increases in disposable income won’t happen until employment starts to rise again. And jobs can’t grow until small businesses have access to bank loans for working capital. As I wrote in a recent post, business loans are still falling. When loans turn up, so will jobs and personal income.