PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

The Positive News Continues on Personal Income Growth

By at 31 July, 2018, 11:23 am

...real per capita disposable income has now increased for 12 straight months. That’s an impressive period of growth – rising from $42,726 (in 2012 dollars) in June 2017 to $43,730 in June 2018.

by Raymond J. Keating-

The June report on personal income from the U.S. Bureau of Economic Analysis continued with good news on the income front.

First, personal income growth of 0.4 percent for the month was solid, and continued a strong streak.

Second, inflation as measured by the personal consumption expenditures (PCE) price index was calm at 0.1 percent, slowing from the 0.2 percent increases in May and April. PCE inflation over the past year ran at 2.2 percent.

Third, and most important in terms of what matters to the economy, is that real per capita disposable income growth continued in June. Real per capita disposable personal income is personal income less current taxes, while accounting for inflation and population, and it is the income that individuals and families have for investing, saving and consuming.

Fourth, real per capita disposable income has now increased for 12 straight months. That’s an impressive period of growth – rising from $42,726 (in 2012 dollars) in June 2017 to $43,730 in June 2018.

As SBE Council has noted before, and as seen in Chart 1, disposable income was given a boost with the tax cut signed into law in December 2017, which was the exact opposite from what occurred when a major tax increase was inflicted in January 2013.

Looking ahead, making permanent the individual and non-C-Corp business tax relief passed in December 2017 (due to expire in 2025) is vital to continuing to grow the economy and incomes. Indeed, further relief is needed in terms of reducing tax rates on individuals and non-C-Corp enterprises.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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