EconoIndicators

Personal Income and Spending At a Glance

• Personal Income: $11,932.9 Billion
• Monthly Change: Up $32.2 Billion
• Real Disposable Personal Income: Up 0.4%
• Personal Spending (Outlays): $10,433.3 Billion
• Monthly Change: Up $44.6 Billion

Technorati Tags: personal income, spending, disposable income, real DPI

PERSONAL INCOME AND OUTLAYS
January 2008

Personal income increased $32.2 billion, or 0.3 percent, and disposable personal income (DPI)
increased $46.6 billion, or 0.4 percent, in January, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $39.9 billion, or 0.4 percent. In December,
personal income increased $54.0 billion, or 0.5 percent, DPI increased $46.0 billion, or 0.4 percent,
and PCE increased $32.0 billion, or 0.3 percent, based on revised estimates.

2007 2008
Sept. Oct. Nov. Dec. Jan.
(Percent change from preceding month)
Personal income, current dollars 0.4 0.2 0.3 0.5 0.3
Disposable personal income:
Current dollars 0.4 0.2 0.3 0.4 0.4
Chained (2000) dollars 0.1 -0.1 -0.4 0.1 0.1
Personal consumption expenditures:
Current dollars 0.5 0.3 0.9 0.3 0.4
Chained (2000) dollars 0.2 0.0 0.2 0.0 0.0

This news release also presents revised estimates of wages and salaries, personal taxes, and
contributions for government social insurance for July through September 2007 (third quarter).
These estimates reflect newly available third-quarter wage and salary tabulations from the quarterly
census of employment and wages from the Bureau of Labor Statistics.

The January change in personal income was boosted by several special factors. Bonus payments
and gains on the exercise of stock options boosted private wage and salary disbursements; pay raises
for federal civilian and military personnel boosted government wage and salary disbursements; and
cost-of-living adjustments to several federal transfer payment programs boosted personal current
transfer receipts. The January change was reduced by a decrease in Medicare part D prescription
drug benefit payments, annual adjustments to personal contributions for government social
insurance (a subtraction in calculating personal income), and by lump-sum social security benefit
payments that had boosted December personal income. Excluding these special factors, personal
income increased $27.4 billion, or 0.2 percent, in January, after increasing $47.0 billion, or 0.4
percent, in December. These special factors are discussed more fully below.

Compensation of employees

Private wage and salary disbursements increased $23.1 billion in January, compared with an
increase of $23.2 billion in December. The January change in private wages and salaries was
boosted by an adjustment of $15.0 billion (at an annual rate) for large bonus payments. This type of
irregular payment is not accounted for in the primary monthly source data for wages and salaries.
The adjustment to January wages was based on data from state governments and from other sources.
Goods-producing industries’ payrolls increased $0.5 billion in January, in contrast to a decrease of
$1.2 billion in December; manufacturing payrolls increased $0.3 billion, in contrast to a decrease of
$0.4 billion. Services-producing industries’ payrolls increased $22.5 billion, compared with an
increase of $24.3 billion.

Government wage and salary disbursements increased $9.4 billion in January, compared with
an increase of $3.4 billion in December. Pay raises for civilian and military personnel added $7.2
billion to government payrolls in January.

Employer contributions for employee pension and insurance funds increased $6.1 billion in
January, compared with an increase of $3.4 billion in December.

Employer contributions for government social insurance increased $6.2 billion in January,
compared with an increase of $1.5 billion in December. The January increase reflected an increase
in the tax rate paid by employers to state unemployment insurance funds and an increase in the
social security taxable wage base (from $97,500 to $102,000); together, these changes added $4.0
billion to the January increase. (Changes in employer contributions for government social insurance
do not affect personal income, because employer contributions for government social insurance are
also included in total contributions for government social insurance, which is a subtraction in the
calculation of personal income.)

Other personal income

Proprietors’ income increased $7.9 billion in January, in contrast to a decrease of $2.4 billion in
December. Farm proprietors’ income increased $0.3 billion, compared with an increase of $2.1
billion. Nonfarm proprietors’ income increased $7.7 billion, in contrast to a decrease of $4.7 billion.

Rental income of persons decreased $2.6 billion in January, in contrast to an increase of $2.3
billion in December. Personal income receipts on assets (personal interest income plus personal
dividend income) increased $3.7 billion, compared with an increase of $3.1 billion.

Personal current transfer receipts decreased $7.3 billion in January, in contrast to an increase of
$22.7 billion in December. The January change primarily reflects a decrease in federal Medicare
part D prescription drug payments to recover overpayments that were made in 2006. The January
change in current transfer receipts was also reduced by lump-sum social security benefits payments,
which had added $7.0 billion to December benefit payments; these benefit payments resulted from a
recalculation of the earnings base underlying the benefits for recent retirees. The January change in
current transfer receipts was boosted by 2.3-percent cost-of-living adjustments to social security
benefits and to several other federal transfer payment programs; together, these changes added $15.5
billion to the January increase.

Contributions for government social insurance — a subtraction in calculating personal income –
increased $14.2 billion in January, compared with an increase of $3.3 billion in December. The
January increase reflected increases in both employer and personal contributions for government
social insurance. As noted above, employer contributions were boosted $4.0 billion in January by
increases in unemployment-insurance rates and in the social security taxable wage base. The
January increase in personal contributions for government social insurance reflected an increase in
the monthly premiums paid by participants in the supplementary medical insurance program
(Medicare B) and the increase in the social security taxable wage base; together, these changes
added $5.0 billion to the January increase.

Personal current taxes and disposable personal income

Personal current taxes decreased $14.4 billion in January, in contrast to an increase of $8.0
billion in December. Federal net nonwithheld income taxes (payments of estimated taxes plus final
settlements less refunds) reduced the January change by $23.2 billion, based on federal budget
projections of lower final settlements and higher refunds for 2008. Indexation provisions of current
tax law reduced federal withheld income taxes by $4.1 billion in January.

Disposable personal income (DPI) — personal income less personal current taxes — increased
$46.6 billion, or 0.4 percent, in January, compared with an increase of $46.0 billion, or 0.4 percent,
in December.

Personal outlays and personal saving

Personal outlays — PCE, personal interest payments, and personal current transfer payments
increased $44.6 billion in January, compared with an increase of $28.3 billion in December. PCE
increased $39.9 billion, compared with an increase of $32.0 billion.

Personal saving — DPI less personal outlays — was a negative $6.2 billion in January, compared
with a negative $8.2 billion in December. Personal saving as a percentage of disposable personal
income was a negative 0.1 percent in January, the same percentage as in December. Negative
personal saving reflects personal outlays that exceed disposable personal income. Saving from
current income may be near zero or negative when outlays are financed by borrowing (including
borrowing financed through credit cards or home equity loans), by selling investments or other
assets, or by using savings from previous periods. For more information, see the FAQs on “Personal
Saving” on BEA’s Web site. For a comparison of personal saving in BEA’s national income and
product accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and
data on changes in net worth (which help finance consumption), go to
http://www.bea.gov/bea/dn/nipaweb/Nipa-Frb.asp.

Real DPI and real PCE

Real DPI — DPI adjusted to remove price changes — increased 0.1 percent in January, the same
increase as in December.

Real PCE — PCE adjusted to remove price changes — increased less than 0.1 percent in
January, the same increase as in December. Purchases of durable goods decreased 1.3 percent,
compared with a decrease of 0.6 percent. Purchases of motor vehicles and parts accounted for most
of the January decrease. Purchases of nondurable goods decreased 0.2 percent in January, the same
decrease as in December. Purchases of services increased 0.4 percent in January, compared with an
increase of 0.2 percent in December.

PCE prices — The price index for PCE increased 0.4 percent in January, compared with an
increase of 0.3 percent in December. Prices, excluding food and energy, increased 0.3 percent,
compared with an increase of 0.2 percent.

2007 Personal Income and Outlays

Personal income increased 6.1 percent in 2007 (that is, from the 2006 annual level to the 2007
annual level), compared with an increase of 6.6 percent in 2006. DPI increased 5.7 percent,
compared with an increase of 5.9 percent. PCE increased 5.5 percent, compared with an increase of
5.9 percent.

Real DPI increased 3.0 percent in 2007, compared with an increase of 3.1 percent in 2006.
Real PCE increased 2.9 percent, compared with an increase of 3.1 percent.

Revisions

Estimates for personal income and DPI have been revised for July through December; estimates
for PCE have been revised for October through December. Changes in personal income, current-
dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for
November and December — revised and as published in last month’s release — are shown below.

For July through December, the revisions to wages and salaries reflected the incorporation of
the most recently available BLS tabulations of third-quarter private wages and salaries from the
quarterly census of employment and wages. Wages and salaries were revised down for all six months.

Change from preceding month

November December
Previous Revised Previous Revised Previous Revised Previous Revised
(Billions of dollars) (Percent) (Billions of dollars) (Percent)
Personal Income:
Current dollars………………… 47.6 33.7 0.4 0.3 55.1 54.0 0.5 0.5
Disposable personal income:
Current dollars…………………. 37.6 25.7 0.4 0.3 47.5 46.0 0.5 0.4
Chained (2000) dollars…………… -17.1 -33.8 -0.2 -0.4 18.3 11.4 0.2 0.1
Personal consumption expenditures:
Current dollars…………………. 94.6 86.6 1.0 0.9 23.5 32.0 0.2 0.3
Chained (2000) dollars…………… 33.0 19.7 0.4 0.2 -0.9 0.7 0.0 0.0

BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting
the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

Personal Income and Spending - January 2008 [PDF]

Personal Income and Spending - January 2008 [Text]

Personal Income and Spending Spreadsheet - January 2008 [Excel]

Source: Commerce Department, Bureau of Economic Analysis