July 31, 2020

Even as GDP tanked, personal income grew thanks to government support

By Denitsa Tsekova

While the U.S. economy contracted at the sharpest rate on record in the second quarter, people’s income increased significantly, thanks to government support during that time.

Personal income grew by 7.3% in the second quarter compared with the first, while the nation’s gross domestic product, or GDP, shrank by 32.9%, according to data by the Bureau of Economic Analysis’ (BEA). GDP is a key measure of economic health.

But as the extra $600 in weekly unemployment benefits expire this week, the trend likely won’t continue and, instead, personal incomes could plunge and drag down future GDP.