U.S. incomes actually *went up* in April. Here’s what that tells us.
While incomes jumped, consumer spending cratered by 13.6 percent. In other words, Americans put a lot of money in the bank last month. The personal savings rate shot all the way up to 33 percent.
Because so much of April’s rise was due to one-off cash payments, it’s likely that incomes fell back down a bit in May. But the fact that the government not only managed to stabilize Americans’ finances on the whole but also increase them enough to pad their savings should quiet some complaints about the CARES Act, the rescue bill Congress passed in March that was sometimes caricatured as doing more to help large corporations than actual families.
If the coronavirus were actually under control at this point, it’s conceivable we’d even be poised for a quick economic recovery. After all, the April numbers suggest we’ve managed to keep households whole, on average. And as the crowded beach scenes across the country show, a lot of Americans are eager to get out of quarantine and spend some of the money they’ve been saving away. Unfortunately, the pandemic is still very much with us.
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