PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Disposable Income Data: Year-End Stall Follows Long Period of Growth

By at 31 January, 2020, 8:45 pm

by Raymond J. Keating-

The key data from the U.S. Bureau of Economic Analysis report on personal income is real per capita disposable income, which basically stalled at the end of 2019.

Real per capita disposable personal income is personal income less personal current taxes, and adjusted for population and inflation. This is the income from which individuals make key economic decisions and take actions, that is, the resources used for investing, saving and consuming.

Real per capita disposable income grew to $45,937 (2012 dollars) in September 2019, and then subsequently stalled, actually declining a bit – coming in at $45,805 in October, $45,931 in November, and $45,877 in December.

Source: Federal Bank of St. Louis, FRED

Thankfully, this recent stall comes after a long period of growth (see the above chart), especially since mid-2016. So, hopefully this is simply a pause in a longer growth trend.

The best way to get back on a solid growth track in terms of disposable income is to reduce tax burdens, as well as taking other steps that will boost productivity, such as regulatory relief and reducing trade barriers.

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

 

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