US personal income growth highest ever last year on stimulus package

[WASHINGTON] Americans earned an additional US$1.1 trillion last year - the most ever in data dating back to 1930 - thanks entirely to stimulus checks and other government aid.

Total US personal income rose 6.1 per cent last year to US$19.7 trillion as a surge in pandemic-era aid outpaced gains in wages, property values and other sources of wealth, according to the US Bureau of Economic Analysis.

The dollar amount of so-called transfer receipts, which include Covid relief payments, steered income growth in 26 states while increases in other types of personal income led in 25 including the District of Columbia, the preliminary estimates show.

The report illustrates how important government relief programmes have been in helping to shore up Americans' finances as the world's largest economy recovers from the pandemic. On top of stimulus checks, an additional US$498 billion was doled out in state unemployment benefits last year, according to the data.

Personal income growth ranged from 8.4 per cent in Arizona and Montana to 2.4 per cent in Wyoming. Gains were strongest in the West.

For the nation, wages increased 0.3 per cent in 2020, the smallest gain since 2009. Northeastern and Midwestern states that have experienced industrial declines saw the sharpest declines in wages last year.

The new data, published Wednesday, also provides a look at how the pandemic affected state economies by industry. For example, New York's arts, entertainment, and recreation sector suffered a US$7.8 billion loss while accommodations and food services declined by US$10.1 billion.

BLOOMBERG

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