Current and Historical Data for Real Per-Capita Disposable Personal Income
Review the current and historical data for Real Per-Capita Disposable Personal Income by quarter at Economagic.com.
Real Per-Capita Disposable Personal Income and Real GDP: Annual Percent Change Relative to Same Period Last Year
Real per-capita disposable personal income is derived from real GDP, and so we would expect them to move together over time (unless there is a dramatic change in population or personal tax rates). In fact we can see in the diagram below that both tend to fall during recessions and rebound during the subsequent recovery. It is interesting to note that while the rate of economic growth (increases in real GDP) exceeded the rate of growth in real per-capita disposable personal income during the economic boom in much of the 1990's, during the recession in 2001 that relationship reversed itself, and incomes increased faster than the overall economy. Tax cuts by President Bush help explain rising real per-capita disposable personal income during the recession in 2001 and the weak recovery in 2002. Real per-capita disposable personal income has experienced very slow growth since 2005, which along with declines in the housing sector may result in slowing growth in consumer expenditures in 2007.
Real Per-Capita Disposable Personal Income and the Productivity Index: Annual Percent Change Relative to the Same Period Last Year
Productivity gains are a key reason for increases in real per-capita income and economic growth. For example, improvements in labor productivity (increased output per hour of labor) allow wages to rise without spurring accelerating inflation. You can see from the diagram below that generally the growth rate for real per-capita income moves with the growth rate for productivity. The rate of growth in productivity slowed substantially in 2005 and 2006 relative to the recent past, which may have contributed to the slower rate of growth in real per-capita disposable personal income during the same time period.
Real Per-Capita Disposable Personal Income and Personal Consumption Expenditures: Annual Percent Change Relative to Same Period Last Year
The greater percentage of real per-capita income in most countries is used for consumption spending rather than saving, with the percentage varying by culture and other factors. Thus we would expect to see real per-capita income and real personal consumption expenditures moving together over time. The percentage of income that is allocated to consumption spending depends in part on consumer confidence in the state of the economy. During strong economic times such as the mid-1980's and the mid- and late-1990's consumer confidence and stock market gains were both robust, causing growth rates in real consumption expenditures to exceed that of real per-capita income by a relatively large margin. This pattern generally reverses itself during periods of economic slowdown and recession, when declining consumer confidence can cause spending to fall faster than income. Some economists attribute part of the disparity between the growth in consumer spending and the growth in real per-capita disposable personal income in 2003-05 to low interest rates, rising home prices, and the spend-down of home equity through the refinancing of home mortgages. As mortgage interest rates have risen, the refinancing market has leveled off, which may help explain the most recent slight decline in the growth rate for consumption expenditures. Growth in personal consumption continued to grow at a much higher rate than real per-capita incomes in 2006. It is not clear that this rate of personal consumption growth can continue without a corresponding increase in real incomes.