The Commerce Department's Bureau of Economic Analysis reported that tax rebate checks and economic stimulus payments have boosted personal income, disposable income and personal consumption expenditures significantly since April.
Personal income increased $225.7 billion, or 1.9 percent, and disposable personal income increased $600.3 billion, or 5.7 percent, in May. Personal consumption expenditures increased $77.4 billion, or 0.8 percent. In April, personal income increased $33.5 billion, or 0.3 percent, DPI increased $39.8 billion, or 0.4 percent, and PCE increased $41.1 billion, or 0.4 percent, based on revised estimates.
Real disposable income rose 5.3 percent in May, compared with an increase of 0.1 percent in April. Real PCE increased 0.4 percent, compared with an increase of 0.2 percent.
The May and April changes in disposable personal income - personal income less personal current taxes - were boosted as a result of provisions of the Economic Stimulus Act of 2008, said the report. The federal government issued rebate payments of $48.1 billion in May and $1.9 billion in April. These payments reduced personal current taxes and increased government social benefit payments. As a result, disposable personal income increased substantially. Excluding these special factors, disposable personal income increased $46.4 billion, or 0.4 percent, in May, after increasing $16.6 billion, or 0.2 percent, in April.
Personal current taxes decreased $374.5 billion in May, compared with a decrease of $6.4 billion in April. A reduction in federal income taxes accounted for the decreases in May and in April. Provisions of the Economic Stimulus Act of 2008 reduced the level of personal current taxes by $397.5 billion at an annual rate in May and $15.5 billion at an annual rate in April. The reduction in current personal taxes reflected rebate payments to eligible individual taxpayers. Disposable personal income increased $600.3 billion, or 5.7 percent, in May, compared with an increase of $39.8 billion, or 0.4 percent, in April.
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