A Positive Direction for Personal Income

By at 30 October, 2020, 3:49 pm

by Raymond J. Keating-

The latest personal income report from the U.S. Bureau of Economic Analysis offers glimmers of hope that the economy is moving in the right direction.

Specifically, personal income rose by 0.9 percent in September, along with a 0.7 percent increase in real disposable personal income.

Regarding personal income, the BEA reported, “The increase in personal income in September reflected increases in proprietors’ income, compensation of employees, and rental income of persons that were partly offset by a decrease in government social benefits.” That is, wages, salaries, and small business income increased in September, while government aid declined. That’s the trend we need to take hold for the long-run health of the economy.

Real per capita disposable income – that is, personal income less personal current taxes adjusted for inflation and population – remains the most important measure served up in this monthly report. This is the income from which people invest, save and consume.

Again, it was a positive signal to see real per capita disposable income rise in September. It had spiked up in April due to government aid, and then generally declined into August. So, once more, seeing disposable income in September, absent a jump in government aid, is a positive signal.

Source: Federal Reserve Bank of St. Louis, FRED

Now, we need to keep moving in the right direction as wait for the approval of effective vaccines and therapeutics from the entrepreneurs, businesses and employees hard at work in the pharmaceuticals industry.

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



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