Covid relief measures enacted by Congress boosted personal incomes by $1.6 trillion through direct payments between April 2020 and March 2021. Add in the positive economic effects of all Covid relief spending over that time period, and the total increase in personal incomes comes to more than $2.5 trillion, according to an analysis by the Committee for a Responsible Federal Budget.
Looking at the money households had to spend after taxes, nominal disposable personal income grew by an estimated $1.8 trillion, CRFB said – an increase of 10.6%, twice the annual rate seen in the previous three years.
“This massive income growth is almost entirely attributable to COVID relief and prior law unemployment benefits,” CRFB said. “Absent those factors and their economic effects, we estimate personal income would have fallen by about 5 percent or nearly $1 trillion over the past year.”
Looking ahead, the income support payments are expected to fade, likely contributing to a drop in personal incomes over the next 12 months. Even so, a rapidly growing economy should make up for much of the loss in income supports.