A higher national income figure does not necessarily mean more purchasing power. On March 1, 2017, the Bureau of Economic Analysis reported that January disposable personal income rose 0.3 percent in current dollars but fell 0.2 percent after inflation. For workers reading the headline, the distinction is between the size of the income total and what that total can buy. [BEA 17-08]

Disposable income means personal income after personal current taxes. BEA's real measure removes price changes, using chained 2009 dollars in this release. Its PCE price index rose 0.4 percent in January. These are monthly, nonannualized percentage changes; the displayed rounded figures should not be treated as an exact subtraction exercise. [BEA 17-08]

The earlier release, issued January 30, had put December's real disposable income growth at 0.1 percent. January's negative reading therefore differed from the positive result initially reported for December. This compares two historical releases, not an untouched time series: March's report also updated earlier estimates. Both documents come from BEA and form one evidence chain. [BEA 17-08][BEA 17-04]

The useful question for a household is not whether its experience matches a supposed average. These are aggregate income measures, neither an average nor a median household result. Our public-interest reading is to keep two checks separate: use the real total to understand economy-wide purchasing power, then use actual income and bills to assess a family's position. The national decline alone cannot identify whose budget tightened. [BEA 17-08][BEA 17-04]

Source documents

  1. Personal Income and Outlays, January 2017 | U.S. Bureau of Economic Analysis (BEA)https://www.bea.gov/news/2017/personal-income-and-outlays-january-2017
  2. Personal Income and Outlays, December 2016 | U.S. Bureau of Economic Analysis (BEA)https://www.bea.gov/news/2017/personal-income-and-outlays-december-2016