Friday, December 21, 2007

Real Disposable Income Shows Economic Strength

The BEA reported today that Real Disposable Income grew by 2.1% in November from a year ago, the 23rd consecutive month of positive growth (see chart above).

Bottom Line: This is one of the 5 economic recession-indicating variables watched by the NBER (the others are real GDP, industrial production, trade sales and employment), and suggests that there is still no evidence yet that recessionary conditions are affecting the U.S. economy.

9 Comments:

At 12/21/2007 10:21 AM, Anonymous Anonymous said...

Well, let's see. Pencil to envelope tells me that my disposable income has not increased while the amount of my income disposed of by all those poeple who want a piece of me has increased.

 
At 12/21/2007 10:29 AM, Anonymous Anonymous said...

I have some questions and would be grateful if someone could answer.

Does the fact that Personal Consumption Expenditures (PCE) rose 3.0% over November of last year mean that the impact of Real Disposable Income is lessened?

Why is the PCE from Table 10 3.0% but the PCE from Table 11 3.7%?

The "Rental income of persons with capital consumption adjustment" rose 61% in Q3 2007 compared to Q3 2006, could that have something to do with the why the Real Disposable Income also rose?

If there is such a huge increase in rental income could that mean that people are moving out of houses they bought and renting what they can afford? I'm thinking subprime crisis here because rents can't really go up that much nationwide can they?

I also noticed there is a negative savings rate. Is this normal or does this mean that consumers are taking on higher levels of debt to sustain previous spending levels?

 
At 12/21/2007 10:36 AM, Anonymous Anonymous said...

What are the other four variables?

 
At 12/21/2007 12:38 PM, Anonymous Anonymous said...

The income in my check may have up. It is short lived. I January, the new insurance season starts. The increase in insurance premiums along with the continued high cost of all type of fuel mean that my "increase in Real Disposable Income" is just a mirage in desert.

 
At 12/21/2007 1:28 PM, Anonymous Anonymous said...

I just gave an employee a 36% raise and I pay for her health insurance.

For her it's real.

 
At 12/21/2007 3:44 PM, Anonymous Real Estate said...

We live in Dayton, OH there are several things going on that hurt disposable income. Food prices are through the roof. Are house prices are dropping like a rock, and our industrial economy is losing jobs just like Flint MI. These are all cutting into disposable income in our area

 
At 12/21/2007 6:28 PM, Anonymous Anonymous said...

So everyone is making more money and spending more but there is no appreciable inflation.

Amazing.

 
At 1/02/2008 11:41 AM, OpenID lsw321 said...

Everywhere I look on the internet it says disposable income is increasing but almost everyone I talk to is feeling pinched by food, gas, insurance and utility bills. There is a real disconnect here. My view, the consumer is now spending more than he makes, he will do that for 6-12 months and then the bills will start to eat at him and his meager savings will dwindle. He will look to tap the equity in his home again and find the credit market is dry and the equity diminished. Then finally, he will have to cut spending and corporate greed will have sunk the economy. Why corporate greed? Trust me, no CEO's are hurting or VP's for that matter. Profits have been made by cutting wages. Furthermore, also on this head in the sand republicans web site "global cooling" and "expansive oil reserves" . These ideas are ludicrous. Oil reserves MUST BE EXHAUSTED at some point, it is a finite amount. There are no more dinosaurs. The only question is when. The only scientists who do not believe in global warming are employed by the oil companies.

 
At 1/05/2008 9:30 PM, Anonymous Anonymous said...

weird, the commerce department just reported this. what up?

"Real DPI -- DPI adjusted to remove price changes -- decreased 0.3 percent in November,
compared with a decrease of 0.2 percent in October."

 

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