Personal Income in January Took Biggest Hit in 20 Years
The rate at which personal income grows plummeted 3.6 percent in January, the biggest one-month decrease in 20 years, as Americans spent a little more to keep warm and fill up at the pumps.
The Commerce Department report Friday was a bit of a jolt on first reading, but the biggest indicators of how consumers are dealing with the end of the 2 percent payroll tax cut will likely come next month in the report for February.
The sharp decline in personal income in January marked the largest drop since January 1993. Part of the decline was a pullback from a 2.6 percent surge in December, as businesses rushed to pay out dividends and bonuses before the new year’s hike in taxes.
A portion of the drop in January also reflected the tax increases. The income at the disposal of households after inflation and taxes plunged 4 percent in January, after advancing 2.7 percent in December.
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