Personal income had its biggest increase since April last month, the result of government aid in the form of stimulus checks going out to millions of Americans, continued unemployment benefits and other pandemic response programs.

Personal income rose 10 percent in January, the Bureau of Economic Analysis said Friday. The increase was slightly higher than economists predicted and a huge acceleration from prior months. 

Consumer spending also rose, with personal consumption expenditures increasing by 2.4 percent, another improvement from the previous month’s numbers. 

The increase in personal income and consumer spending are signs that the economy is slowly improving. The 10 percent increase in personal income represents a $1,954.7 billion increase from last month, with a $69.7 billion increase in wages and salaries alone. But these increases also show the recovery’s continued reliance on government aid as the pandemic continues to affect the economy. Government social benefits alone increased by $1,976.9 billion. 

“In general, the economy’s entering 2021 with a very strong trajectory, and the stimulus checks are part of it,” said chief economist at Action Economics LLC Michael Englund. “Consumption is back on track, showing that we are still rebounding very sharply from last April.”

Personal income and consumer spending should continue to increase with vaccine distribution and the lifting of restrictions for businesses, as well as the potential release of future stimulus checks.

“I think as we move forward, each month is going to successively become better in terms of consumer spending,” Chief economist at Amherst Pierpont Securities LLC Stephen Stanley said. “We’re moving in the right direction. And I think we’re saying, as the Fed has said many times, that the evolution of the economy at this point is really dependent more than anything else on how the pandemic proceeds.”

Even with the increase of personal income and consumer spending, personal savings was also on the rise, with a $1,614.5 billion increase. Stanley says that it is possible that some Americans have decided to save and not spend their $600 stimulus checks.

“The data kind of suggests that the increase in savings was almost identical to the magnitude of the rebate checks,” Stanley said. 

Personal income and consumer spending have taken some unusual trajectories in recent months. In November and December, both personal income and consumer spending were lower than normal, with personal income at -1.2 percent in November and 0.6 percent in December, and consumer spending  at -0.6 percent in November and -0.4 percent in December.  These swings could be partly the result of quirks in the seasonal adjustment process. Ordinarily, seasonal adjustment helps account for regular patterns in the data, such as big increases in spending during the holidays. But the pandemic has disrupted those patterns. 

“The seasonal adjustments assume a big run up in spending near the end of the year that we just didn’t get, and as a result, you’re supposed to get a big fall off in January, and that didn’t happen.” Stanley said. “We had declines in consumer spending in November, December, and then this huge rebound in January.”

Even though personal savings are higher than normal and the last few months data shows unusual patterns in personal income, recent numbers do bode well for the economy’s future.