Spending power
Economic data

A fistful of dollars

US disposable income surges amid a shrinking economy

By 
Julius Probst, PhD
 on 
March 22, 2021

The gap between disposable income and economic growth in the US has never been wider.

When times are tough, people typically have less cash to spend. But the COVID-19 pandemic has reversed that correlation.

After more than a year of lockdown, and with the US administration set to hand out another round of stimulus – part of a massive $1 American households have more spending money than ever before.

As our chart shows, disposable household income has risen to 9% above the expected average, while GDP has fallen to some 6% below trend.

Expect this gap to shrink once pandemic restrictions are lifted, however. Pent-up demand will send consumers on a spending spree that forecasters believe will lead to the fastest nominal GDP growth in decades! Could we be on the cusp of this century’s Roaring 20s?

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