Personal Income Grows, Powered by Stimulus
Number of the Day: The most relevant or interesting figure in personal finance
That’s the number of states in the U.S. where personal income was higher in the third quarter of 2020 than it was a year earlier, according to a new study.
Total personal income grew 5.9% nationwide in the third quarter compared with a year earlier, with every state posting at least a modest increase, Pew Charitable Trusts showed in a report released this week. By comparison, it increased just 2.7% between the third quarters of 2018 and 2019.
The driver behind the growth in 2020? Government assistance like stimulus checks and unemployment insurance benefits, combined with some people getting back to work as the economy gradually reopened.
If not for government aid, 27 states would have experienced declines in personal income. It still would have been an improvement on the second quarter of 2020, when, at the outset of the pandemic, restrictions were the strictest and the economy experienced the deepest job losses. All 50 states saw personal income shrink in the second quarter of 2020 when compared to a year earlier.
To calculate personal income, Pew added paychecks, Social Security benefits, employers’ contributions to retirement plans and health insurance, income from rent and other property, and benefits from public assistance programs. It doesn’t count gains from things like stock market investments.