Improved Personal Income Report for October

By at 1 December, 2023, 9:20 am

by Raymond J. Keating –

The U.S. Bureau of Economic Analysis (BEA) released an improved personal income report for October.

The topline growth rate of 0.2 percent in personal income in October actually slowed from the previous three months. But that is a nominal growth rate, and PCE (personal consumption expenditures) inflation was nonexistent in October (0 percent). So, in real terms, personal income growth turned out to be faster in October than in those previous three months.

And the most important income measure in this report, disposable income (i.e., personal

income less personal current taxes), grew by 0.3 percent in real terms in October. That was the first month of real growth since May 2023.

Source: Federal Reserve Bank of St. Louis, FRED

And on a per capita basis, real disposable income also grew for the first time since May. Given the importance of real per capita disposable income, as this is the income from which individuals invest, save and consume, it is worth taking note of the recent trend. (See the chart above.)

First, government support during the pandemic had no staying power, as the June 2022 level of real per capita disposable income was unchanged from February 2020. Second, we subsequently saw growth run from July 2022 to May 2023. And third, since then, we’ve been stagnant, with the October 2023 level ($50,169 in 2017 dollars) was slightly below the May 2023 level ($50,203).

One month’s data is just that, i.e., one month’s data. But no inflation and real growth in disposable income make for a solid month. Of course, that needs to be tossed into an economic mix of good and bad news, which is not surprising is an under-performing economy plagued by many questions, including on the policy front.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.


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