Nov. 25, 2020
Consumer spending ekes out another gain, personal income falls
By Mary Hightower
U of A System Division of Agriculture
Fast facts:
• Consumer spending up for sixth straight month
• Consumer income slides as government payments end
(500 words)
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FAYETTEVILLE, Ark. — Consumer spending crept upward again in October but personal
income fell thanks in part to the tapering of government payments, according to the
monthly update issued the day before Thanksgiving by the Bureau of Economic Analysis.
“The report was a bit of a good news/bad news event,” said John Anderson. “Personal
income was down in October by 0.65 percent compared to September. September’s personal
income estimate was also revised down slightly from last month’s original estimate.
The market had anticipated basically flat personal income in October.”
Anderson is an agricultural economist for the University of Arkansas System Division
of Agriculture and head of the Agricultural Economics and Agribusiness Department
for the Dale Bumpers College of Agricultural Food and Life Sciences. Anderson has
been providing analysis of the impacts of the COVID pandemic on the U.S. economy.
Government wages, payments down
Anderson said government wages declined by about a half a percentage point, with the
Bureau of Economic Analysis attributing this “to the planned scaling back of temporary
and intermittent employees brought on for the decennial census.” Government social
benefits also declined sharply in October, dropping more than 6 percent.
“The bulk of this decline was due to the rapid tailing off of payments under the Lost
Wage Supplemental Payment program,” he said.
Non-farm proprietor’s income fell nearly 3 percent between September and October,
due mostly to a reduction in payments under the Paycheck Protection Program. However,
other non-farm proprietor income rose modestly in October.
“It’ll be interesting to see if this trend continues in November, with a resurgence
of COVID cases in many areas leading to restrictions on businesses and likely some
erosion in consumer confidence,” Anderson said.
CFAP helps farm income
Farm proprietor’s income was up in October due to payments under the second round
of the Coronavirus Food Assistance Program. The U.S. Department of Agriculture, which
administers the CFAP program, said $7 billion had been paid out as of Oct. 26. USDA
is accepting applications for the second round of the assistance program through Dec.
11. Personal consumption expenditures increased in October, rising by about half a
percentage point from the previous month.
“This is the sixth consecutive month of increasing PCE but the smallest rate of increase
in that six-month period,” Anderson said. “While the rate of recovery in spending
has slowed, with several categories of spending actually flat or a bit lower in October,
PCEs still have yet to eclipse their pre-pandemic level.” Find Anderson’s analysis
here: https://bit.ly/33fDZoi.
Find other COVID-related economic analyses at https://bit.ly/AR-Ag-Eco-Impacts2020.
To learn about extension and research programs in Arkansas, visit https://uada.edu/
Follow us on Twitter at @AgInArk, @uaex_edu or @ArkAgResearch.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen
agriculture, communities, and families by connecting trusted research to the adoption
of best practices. Through the Agricultural Experiment Station and the Cooperative
Extension Service, the Division of Agriculture conducts research and extension work
within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas
System. It has offices in all 75 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension
and Research programs and services without regard to race, color, sex, gender identity,
sexual orientation, national origin, religion, age, disability, marital or veteran
status, genetic information, or any other legally protected status, and is an Affirmative
Action/Equal Opportunity Employer.
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Media Contact: Mary Hightower
Chief Communications Officer
University of Arkansas System Division of Agriculture
mhightower@uada.edu
501-671-2006