New BEA data shows income fell 4.2% from April to May. This is true but misleading.

Income is UP by 5% to 8% relative to (pre-COVID) February and is the second highest in history.

And the fall from April is artificially driven by timing of one-time checks.

Short THREAD/

Market income - income from wages, salaries, business income, dividends, etc - is indeed WAY down. It's down 8% from February to May. That's an improvement from April, when it was down 10%.

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Adding in Social Security and other non-unemployment transfers, income still feel by more than 5% between February and May. That's an improvement from the 7% in April.

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But thanks to (greatly expanded) unemployment benefits and Economic Impact Payments - those $1200/person tax rebates - total income is actually UP by 5.4% in May, compared to February.

Repeat after me: income is higher now than it was before the crisis.

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Market income, transfer income, and unemployment is also rose by 2.1% between April and May.

So why the net drop? Because the Economic Impact Payments offered a ONE TIME check that gets counted when people receive it -- mostly in April.

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If people treat the one-time checks as four months worth of income ("amortized"), income in May is at 6% higher than in April and 7.4% HIGHER THAN BEFORE THE CRISIS.

Under this method, income in May is the HIGHEST ON RECORD.

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How can income be up when the economy is doing so poorly? Because of massive fiscal support - which @BudgetHawks tracks at http://CovidMoneyTracker.org .

But much of that support will fade or disappear after July. Without more legislation, income will fall this summer. A lot.

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