Research >> Economics
Personal Income increased 0.4%, Spending increased 0.2%
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Personal income increased $64.7 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $134.8 billion (0.9 percent) and personal consumption expenditures (PCE) increased $31.2 billion (0.2 percent).
Real DPI increased 0.6 percent in January and Real PCE decreased 0.1 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
The increase in personal income in January primarily reflected increases in wages and salaries and Social Security benefits that were partially offset by an increase in contributions for government social insurance, a subtraction in the calculation of personal income.
The $17.0 billion decrease in real PCE in January reflected a decrease of $24.6 billion in spending for goods and a partially offsetting $4.8 billion increase in spending for services. Within goods, new motor vehicle sales was the leading contributor to the decrease. Detailed information on monthly real PCE spending can be found in Table 2.3.6U.
Personal outlays increased $33.7 billion in January (table 3). Personal saving was $464.4 billion in January and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.2 percent.
Impacts of the Tax Cuts and Jobs Act
Increases in the January estimates of disposable personal income and the personal saving rate mostly result from a decrease in personal current taxes, which reflect the effects of the Tax Cuts and Jobs Act (TCJA). BEA estimates that the TCJA reduced personal current taxes by $115.5 billion at an annual rate. BEA’s preliminary estimates of the effects of the TCJA are based in part on projections prepared by the Treasury Department’s Office of Tax Analysis. For more information on the TCJA’s effects on personal taxes, please see “How will the 2017 Tax Cuts and Jobs Act impact personal taxes?”
January estimates of wages and salaries were adjusted up by $30.0 billion to account for bonuses paid by businesses that are not included in the monthly source data in the Current Employment Statistics from the Bureau of Labor Statistics. This adjustment reflects one-time bonuses reported publicly in response to the TCJA and was derived based on news releases covering estimates of the number of employees receiving bonuses and payment amounts. BEA will release QCEW-based estimates of wages and salaries, that will include both regular and TCJA-related bonus activity, for the first quarter of 2018 on July 27, 2018.
Posted: March 1, 2018 Thursday 08:30 AM