Real Disposable Income Decreasing 0.2 Percent in Nov 2021 and Changing 0.0 Percent in 12 Months, Cyclically Stagnating Real Disposable Income and Consumption Expenditures, Financial Repression, United States Housing, United States House Prices, World Inflation Waves with Accelerations in the US and Worldwide, Stagflation Risk, World Cyclical Slow Growth, and Government Intervention in Globalization
Carlos M. Pelaez
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021.
I Stagnating Real Disposable Income and Consumption Expenditures
IIB1 Stagnating Real Disposable Income and Consumption Expenditures
IB2 Financial Repression
IIA United States Housing Collapse
IIA1 Sales of New Houses
IIA2 United States House Prices
I World Inflation Waves
IA Appendix: Transmission of Unconventional Monetary Policy
IB1 Theory
IB2 Policy
IB3 Evidence
IB4 Unwinding Strategy
IC United States Inflation
IC Long-term US Inflation
ID Current US Inflation
IE Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation and Monetary Policy Based on Fear of Deflation
III World Financial Turbulence
IV Global Inflation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
Preamble. The current federal debt limit of the United States is $29.04 trillion (https://home.treasury.gov/system/files/136/FINAL-Daily-Debt-Subject-Limit-Activity-2021_12_15.pdf). The Net International Investment Position of the United States, or foreign debt, is $15.4 trillion (https://www.bea.gov/sites/default/files/2021-09/intinv221.pdf https://cmpassocregulationblog.blogspot.com/2021/10/total-nonfarm-hires-move-from-4986.html). The United States current account deficit is 3.3 percent of GDP in IIQ2021 (https://cmpassocregulationblog.blogspot.com/2021/10/total-nonfarm-hires-move-from-4986.html). The Treasury deficit of the United States reached $2.8 trillion in fiscal year 2021 (https://fiscal.treasury.gov/reports-statements/mts/). Total assets of Federal Reserve Banks reached $8.8 trillion on Dec 29, 2021 and securities held outright reached $8.3 trillion (https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1). US GDP nominal NSA reached $23.2 trillion in IIIQ2021 (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf). Total Treasury interest-bearing, marketable debt held by private investors increased from $3635 billion in 2007 to $16,439 billion in Sep 2021 (Fiscal Year 2021) or increase by 352.2 percent (https://fiscal.treasury.gov/reports-statements/treasury-bulletin/).
Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 on Jan 4, 2021 to $3.869 per million Btu on Dec 21, 2021 or 49.9 percent.
Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 on Jan 4, 2021 to $4.055 per million Btu on Dec 28, 2021 or 57.1 percent.
Chart VII-4, US, Natural Gas Futures Contract 1
Source: US Energy Information Administration
https://www.eia.gov/dnav/ng/hist/rngc1d.htm
I IB Stagnating Real Disposable Income and Consumption Expenditures. The Bureau of Economic Analysis (BEA) provides important revisions and enhancements of data on personal income and outlays since 1929 (http://www.bea.gov/iTable/index_nipa.cfm). There are waves of changes in personal income and expenditures in Table IB-1 that correspond somewhat to inflation waves observed worldwide (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/11/us-gdp-growing-at-21-saar-in-iiiq2021.html) because of the influence through price indexes. There are wide fluctuations in Nov and Dec 2012 by the rush to realize income of all forms in anticipation of tax increases beginning in Jan 2013. There is major distortion in Jan 2013 because of higher contributions in payrolls to government social insurance that caused sharp reduction in personal income and disposable personal income. The Bureau of Economic Analysis (BEA) explains as follows (page 3 http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January [2013] changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December [2012] in anticipation of changes in individual tax rates.”
The BEA provides the annual update of the national income and product account (https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.html): “Annual Update of the National Income and Product Accounts
The estimates released today reflect the results of the annual update of the national income and
product accounts (NIPAs) in conjunction with preliminary estimates for June 2017. The update covers the most recent 3 years and the first 5 months of 2017. For more information, see information on the “2017 Annual Update” on BEA’s website. Additionally, the August Survey of Current Business will contain an article that describes the results in detail.”
The BEA provides “Comprehensive Update of the National Income and Product Accounts” on Jul 31, 2018 with revisions since 1929 (https://cmpassocregulationblog.blogspot.com/2018/07/revision-of-united-states-national.html): “The estimates released today also reflect the results of the 15th comprehensive update of the National Income and Product Accounts (NIPAs). The updated estimates reflect previously announced improvements (https://www.bea.gov/scb/2018/04-april/0418-preview-2018-comprehensive-nipa-update.htm), and include the introduction of new not seasonally adjusted estimates for GDP, GDI and their major components. For more information, see the Technical Note. Revised NIPA table stubs, initial results, and background materials are available on the BEA website (https://www.bea.gov/index.htm).” The BEA provides the “Annual Update of the National Income and Product Accounts” on Jul 26, 2019 (https://www.bea.gov/system/files/2019-07/NIPA-AU19-Briefing.pdf).
The BEA provides the annual update of the National Income and Product Accounts on Jul 31, 2020 (https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf): “The estimates released today also reflect the results of the Annual Update of the National Income and
Product Accounts (NIPAs). The timespan of the update is the first quarter of 2015 through the fourth quarter of 2019 for estimates of real GDP and its major components, and the first quarter of 1999 through the fourth quarter of 2019 for estimates of income and saving. The reference year remains 2012. More information on the 2020 Annual Update is included in the May Survey of Current Business article, “GDP and the Economy.”
The BEA provides the annual update of the National Income and Product Accounts on Jul 30, 2021 (https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf): “Today’s release also reflects the Annual Update of the National Income and Product Accounts. The timespan of the update is the first quarter of 1999 through the first quarter of 2021 and resulted in revisions to GDP, GDI, and their major components. The reference year remains 2012. With today's release, most NIPA tables are available through BEA’s Interactive Data application on the BEA website (www.bea.gov). See Information on Updates to the National Economic Accounts for the complete table release schedule and a summary of results through 2020, which includes a discussion of methodology changes. A table showing the major current dollar revisions and their sources for each component of GDP, national income, and personal income is also provided. The August 2021 Survey of Current Business will contain an article describing the update in more detail. Previously published estimates, which are superseded by today's release, are found in BEA’s archives.”
The emphasis is now shifting to the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). In the first wave, nominal personal income increased at 2.4 percent in Jan 2019 while nominal disposable personal income decreased at 1.2 percent. Nominal personal consumption expenditures increased at 4.9 percent. Real disposable income changed at 0.0 percent and real personal consumption expenditures increased at 4.9 percent. In the second wave, nominal personal income increased at 4.3 percent in Feb-Mar 2019 while nominal disposable personal income increased at 3.0 percent. Nominal personal consumption expenditures increased at 6.2 percent. Real disposable income increased at 0.6 percent and real personal consumption expenditures increased at 3.7 percent. In the third wave, nominal personal income increased at 1.6 percent in Apr-Jun 2019 while nominal disposable income increased at 0.8 percent. Nominal personal consumption expenditures increased at 5.3 percent. Real disposable income decreased at 1.2 percent and real personal consumption expenditures increased at 2.8 percent. In the fourth wave, nominal personal income increased at 1.2 percent annual equivalent in Jul 2019 while nominal disposable income increased at 3.7 percent. Nominal personal consumption increased at 4.9 percent. Real disposable income increased at 1.2 percent and real personal consumption expenditures increased at 3.7 percent. In the fifth wave, nominal personal income increased at 4.3 percent annual equivalent in Aug-Sep 2019 while nominal disposable income increased at 5.5 percent. Nominal personal consumption increased at 3.0 percent. Real disposable income increased at 4.3 percent and real personal consumption expenditures increased at 2.4 percent. In the sixth wave, nominal personal income increased at 3.7 percent annual equivalent in Oct-Dec 2019 while nominal disposable income increased at 2.8 percent. Nominal personal consumption increased at 3.2 percent. Real disposable income increased at 0.8 percent and real personal consumption expenditures increased at 1.2 percent. In the seventh wave, nominal personal income increased at 11.3 percent annual equivalent in Jan-Feb 2020 while nominal disposable income increased at 11.3 percent. Nominal personal consumption increased at 4.3 percent. Real disposable income increased at 9.4 percent and real personal consumption expenditures increased at 2.4 percent. In the eighth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 80.7 percent annual equivalent in Mar-Apr 2020 while nominal disposable income increased at 109.8 percent. Nominal personal consumption decreased at 71.0 percent. Real disposable income increased at 119.1 percent and real personal consumption expenditures decreased at 69.8 percent. The BEA explains (https://www.bea.gov/sites/default/files/2020-05/pi0420_0.pdf): “The increase in personal income in April primarily reflected an increase in government social benefits to persons as payments were made to individuals from federal economic recovery programs in response to the COVID-19 pandemic (table 3). For more information, see “How are the economic impact payments for individuals authorized by the CARES Act of 2020 recorded in the NIPAs?” “Other government social benefits to persons” are $3,122.1 billion in Apr 2020 compared with $528.3 billion in Mar 2020 (https://www.bea.gov/sites/default/files/2020-05/pi0420_0.pdf). In the ninth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income decreased at 25.9 percent annual equivalent in May-Jun 2020 while nominal disposable income decreased at 30.3 percent. Nominal personal consumption increased at 138.0 percent. Real disposable income decreased at 33.3 percent and real personal consumption expenditures increased at 130.1 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-06/pi0520_0.pdf): “The May estimate for personal income and outlays was impacted by the response to the spread
of COVID-19. Federal economic recovery payments continued but were at a lower level than in
April, and government “stay-at-home” orders were partially lifted in May. The full economic
effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays
estimate for May because the impacts are generally embedded in source data and cannot be
separately identified. For more information, see the “highlights” file and the Effects of Selected
Federal Pandemic Response Programs on Personal Income table.” The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf): “The decrease in personal income in June was more than accounted for by a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in May (table 3). For more
information, see “How are the economic impact payments for individuals authorized by the CARES Act of 2020 recorded in the NIPAs? Partially offsetting the decrease in other government social benefits were increases in compensation of employees and proprietors’ income as portions of the economy continued to reopen in June.
Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, also increased in June. For more information, see “How will the expansion of unemployment benefits in response to the COVID-19 pandemic be recorded
in the NIPAs?”.” In the ninth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 11.4 percent annual equivalent in Jul 2020 while nominal disposable income increased at 11.4 percent. Nominal personal consumption increased at 22.4 percent. Real disposable income increased at 7.4 percent and real personal consumption expenditures increased at 18.2 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-08/pi0720.pdf): “The July estimate for personal income and outlays was impacted by the response to the spread of COVID-19. Federal economic recovery payments continued but were at a lower level than in June,
and government “stay-at-home” orders lifted in some areas of the country. The full economic
effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays
estimate because the impacts are generally embedded in source data and cannot be separately
identified. For more information, see Effects of Selected Federal Pandemic Response Programs on Personal Income. The increase in personal income in July was more than accounted for by compensation of employees as portions of the economy continued to reopen (table 3). Proprietors’ income and rental income of persons also contributed to the increase. Partially offsetting these increases were decreases in government social benefits and income on assets.
Unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration, decreased in July. For more information, see “How will federal government responses to the COVID-19 pandemic affect unemployment insurance benefits?”.” In the tenth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income decreased at 29.8 percent annual equivalent in Aug 2020 while nominal disposable income decreased at 34.0 percent. Nominal personal consumption increased at 12.7 percent. Real disposable income decreased at 36.4 percent and real personal consumption expenditures increased at 8.7 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-10/pi0820.pdf): “The decrease in personal income in August was more than accounted for by a decrease in
unemployment insurance benefits, based primarily on unemployment claims data from the Department of Labor’s Employment and Training Administration (table 3). In particular, the Federal Pandemic Unemployment Compensation program which provided a temporary weekly supplemental payment of $600 for those receiving unemployment benefits expired on July 31. For more information, see “How
will federal government responses to the COVID-19 pandemic affect unemployment insurance
benefits?”. Partially offsetting the decrease in unemployment insurance benefits was an increase in compensation in August. Government wage and salary disbursements increased $17.5 billion in August, following an increase of $14.5 billion in July. Temporary and intermittent Census decennial workers boosted government wages and salaries by $10.8 billion in August.” In the eleventh wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 8.7 percent annual equivalent in Sep 2020 while nominal disposable income increased at 8.7 percent. Nominal personal consumption increased at 19.6 percent. Real disposable income increased at 7.4 percent and real personal consumption expenditures increased at 16.8 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2020-10/pi0920.pdf). In the eleventh wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income decreased at 7.0 percent annual equivalent in Oct-Nov 2020 while nominal disposable income decreased at 9.7 percent. Nominal personal consumption decreased at 0.6 percent. Real disposable income decreased at 10.3 percent and real personal consumption expenditures decreased at 1.2 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2020-11/pi1020.pdf and https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf). In the twelfth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 83.7 percent annual equivalent in Dec 2020-Jan 2021 while nominal disposable income increased at 90.8 percent. Nominal personal consumption increased at 17.9 percent. Real disposable income increased at 83.2 percent and real personal consumption expenditures increased at 12.4 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf). In the thirteenth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event, nominal personal income decreased at 59.2 percent annual equivalent in Feb 2021 while nominal disposable income decreased at 64.2 percent. Nominal personal consumption decreased at 12.4 percent. Real disposable income decreased at 65.6 percent and real personal consumption expenditures decreased at 14.5 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf). In the fourteenth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 885.0 percent annual equivalent in Mar 2021 while nominal disposable income increased at 1183.6 percent. Nominal personal consumption increased at 83.7 percent. Real disposable income increased at 1099.1 percent and real personal consumption expenditures increased at 71.5 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf): “The increase in personal income in March largely reflected an increase in government social benefits (table 3). Within government social benefits, “other” social benefits increased. The American Rescue Plan Act established an additional round of direct economic impact payments to households.” In the fifteenth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income decreased at 62.4 percent annual equivalent in Apr-May 2021 while nominal disposable income decreased at 67.6 percent. Nominal personal consumption increased at 6.2 percent. Real disposable income decreased at 69.7 percent and real personal consumption expenditures changed at 0.0 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf): “The decrease in personal income in April primarily reflected a decrease in government social benefits (table 3). Within government social benefits, "other" social benefits decreased as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in March. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.” The BEA explains further (https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf): “The decrease in personal income in May primarily reflected a decrease in government social benefits (table 3). Within government social benefits, "other" social benefits decreased as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in April. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.” In the sixteenth wave, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), nominal personal income increased at 3.7 percent annual equivalent in Jun 2021 while nominal disposable income increased at 1.2 percent. Nominal personal consumption increased at 14.0 percent. Real disposable income decreased at 4.7 percent and real personal consumption expenditures increased at 7.4 percent. The BEA explains the process (https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf): “The estimate for June of personal income and outlays reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic. Government social benefits associated with pandemic-related assistance programs declined in June. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see Effects of Selected Federal Pandemic Response Programs on Personal Income. The increase in personal income in June primarily reflected an increase in compensation of employees. Government social benefits decreased in June (table 3). Within compensation, the increase was primarily in private wages and salaries, reflecting Bureau of Labor Statistics Current Employment Statistics. Within government social benefits, "other" social benefits decreased as economic impact payments declined. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.
The $155.4 billion increase in current dollar PCE in June reflected an increase of $29.3 billion in spending for goods and a $126.1 billion increase in spending for services (table 3). Within goods, an increase in nondurable goods was partly offset by a decrease in durable goods. Within nondurable goods, the increase was primarily accounted for by increases in “other” nondurable goods (mainly pharmaceuticals) as well as gasoline and other energy goods. Within durable goods, the decrease was primarily in motor vehicles and parts. Within services, increases were widespread across all spending categories, led by food services and accommodations. Detailed information on monthly PCE spending can be found on Table 2.3.5U.” In the seventeenth wave, nominal personal income increased at annual equivalent 15.4 percent in Jul 2021 while nominal disposable income increased at 15.4 percent. Nominal personal consumption expenditures increased at 1.2 percent. Real disposable income increased at 10.0 percent while real personal consumption expenditures decreased at 3.5 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf): “The increase in personal income in July primarily reflected increases in government social benefits and compensation of employees (table 3). Within government social benefits, an increase in "other" social benefits (more than accounted for by advance Child Tax Credit payments as authorized by the American Rescue Plan) was partly offset by a decrease in unemployment insurance, reflecting a decrease in payments from the Pandemic Unemployment Compensation program. Within compensation, the increase was primarily in private wages and salaries, reflecting Bureau of Labor Statistics Current Employment Statistics.” In the eighteenth wave, nominal personal income increased at annual equivalent 3.7 percent in Aug 2021 while nominal disposable income increased at 3.7 percent. Nominal personal consumption expenditures increased at 14.0 percent. Real disposable income decreased at 1.2 percent while real personal consumption expenditures increased at 8.7 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf): “The increase in personal income in August primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase primarily reflected an increase in private wages and salaries. Within government social benefits, an increase in "other" social benefits, reflecting advance Child Tax Credit payments authorized by the American Rescue Plan, was partly offset by a decrease in unemployment insurance, reflecting decreases in payments from the Pandemic Unemployment Compensation program.” In the nineteenth wave, nominal personal income decreased at annual equivalent 11.4 percent in Sep 2021 while nominal disposable income decreased at 14.5 percent. Nominal personal consumption expenditures increased at 7.4 percent. Real disposable income decreased at 17.6 percent while real personal consumption expenditures increased at 3.7 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf): “The decrease in personal income in September primarily reflected a decrease in government social benefits, both in unemployment benefits and “other” benefits (table 3). Unemployment insurance decreased reflecting decreases in payments from the Pandemic Unemployment Compensation program, the Pandemic Emergency Unemployment Compensation program, and the Pandemic Unemployment Assistance program. “Other” social benefits decreased primarily reflecting decreases in the Provider Relief Fund, economic impact payments, and Paycheck Protection Program loans to nonprofit institutions.” In the twentieth wave, nominal personal income increased at annual equivalent 5.5 percent in Oct-Nov 2021 while nominal disposable income increased at 4.9 percent. Nominal personal consumption expenditures increased at 12.7 percent. Real disposable income decreased at 3.0 percent while real personal consumption expenditures increased at 4.3 percent. The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf): “The increase in personal income in October primarily reflected increases in compensation of employees and personal income receipts on assets that were partly offset by a decrease in government social benefits (table 3). Within compensation, the increase primarily reflected an increase in private wages and salaries. Within personal income receipts on assets, both dividend income and interest income increased. Within government social benefits, unemployment insurance decreased, reflecting decreases in payments from three pandemic-related unemployment programs: Pandemic Unemployment Compensation Payments, Pandemic Emergency Unemployment Compensation, and Pandemic Unemployment Assistance (table 3).” The BEA explains further (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf): “The estimate for November personal income and outlays reflected the continued economic recovery and government response to the COVID-19 pandemic. Government social benefits increased in November, reflecting an increase in the Provider Relief Fund (extended by the American Rescue Plan) that was partly offset by declines in many other pandemic-assistance programs. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see Effects of Selected Federal Pandemic Response Programs on Personal Income.”
The United States economy has grown at the average yearly rate of 3 percent per year and 2 percent per year in per capita terms from 1870 to 2010, as measured by Lucas (2011May). An important characteristic of the economic cycle in the US has been rapid growth in the initial phase of expansion after recessions. Inferior performance of the US economy and labor markets is the critical current issue of analysis and policy design. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.1 percent on average in the cyclical expansion in the 49 quarters from IIIQ2009 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the third estimate of GDP for IIIQ2021 (https://www.bea.gov/sites/default/files/2021-12/gdp3q21_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2021/12/us-gdp-growing-at-23-saar-in-iiiq2021.html and earlier https://cmpassocregulationblog.blogspot.com/2021/11/us-gdp-growing-at-21-saar-in-iiiq2021.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2021/12/us-gdp-growing-at-23-saar-in-iiiq2021.html and earlier https://cmpassocregulationblog.blogspot.com/2021/11/us-gdp-growing-at-21-saar-in-iiiq2021.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 50.1 percent. GDP in IIIQ2021 would be $23,673.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4194.7 billion than actual $19,478.9 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 23.4 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.5 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2021/12/increase-in-nov-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/employment-situation-covid19-faq-november-2021.htm). US GDP in IIIQ2021 is 17.7 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,478.9 billion in IIIQ2021 or 23.5 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 2.9 percent per year from Nov 1919 to Nov 2021. Growth at 2.9 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 159.0076 in Nov 2021. The actual index NSA in Nov 2021 is 100.8699 which is 36.6 percent below trend. The underperformance of manufacturing in Mar-Nov 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 167.8289 in Nov 2021. The actual index NSA in Nov 2021 is 100.8699, which is 39.9 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Nov 2021. Using trend growth of 1.8 percent per year, the index would increase to 136.9179 in Nov 2021. The output of manufacturing at 100.8699 in Nov 2021 is 26.3 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 101.5378 in Nov 2021 or 19.8 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6868 in Dec 2007 to 168.9711 in Nov 2021. The NAICS index at 101.5378 in Nov 2021 is 39.9 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6868 in Dec 2007 to 132.3657 in Nov 2021. The NAICS index at 101.5378 in Nov 2021 is 23.3 percent below trend under this alternative calculation.
Table IB-1, US, Percentage Change from Prior Month Seasonally Adjusted of Personal Income, Disposable Income and Personal Consumption Expenditures %
| NPI | NDPI | RDPI | NPCE | RPCE | |
| Nov 2021 | 0.4 | 0.4 | -0.2 | 0.6 | 0.0 |
| Oct | 0.5 | 0.4 | -0.3 | 1.4 | 0.7 |
| AE ∆% Oct-Nov | 5.5 | 4.9 | -3.0 | 12.7 | 4.3 |
| Sep | -1.0 | -1.3 | -1.6 | 0.6 | 0.3 |
| AE ∆% Sep | -11.4 | -14.5 | -17.6 | 7.4 | 3.7 |
| Aug | 0.3 | 0.3 | -0.1 | 1.1 | 0.7 |
| AE ∆% Aug | 3.7 | 3.7 | -1.2 | 14.0 | 8.7 |
| Jul | 1.2 | 1.2 | 0.8 | 0.1 | -0.3 |
| AE ∆% Jul | 15.4 | 15.4 | 10.0 | 1.2 | -3.5 |
| Jun | 0.3 | 0.1 | -0.4 | 1.1 | 0.6 |
| AE ∆% Jun | 3.7 | 1.2 | -4.7 | 14.0 | 7.4 |
| May | -2.0 | -2.4 | -3.0 | 0.0 | -0.5 |
| Apr | -13.3 | -15.1 | -15.5 | 1.0 | 0.5 |
| AE ∆% Apr-May | -62.4 | -67.6 | -69.7 | 6.2 | 0.0 |
| Mar | 21.0 | 23.7 | 23.0 | 5.2 | 4.6 |
| AE ∆% Mar | 885.0 | 1183.6 | 1099.1 | 83.7 | 71.5 |
| Feb | -7.2 | -8.2 | -8.5 | -1.1 | -1.3 |
| AE ∆% Feb | -59.2 | -64.2 | -65.6 | -12.4 | -14.5 |
| Jan | 9.9 | 10.7 | 10.4 | 3.3 | 2.9 |
| Dec 2020 | 0.7 | 0.6 | 0.2 | -0.5 | -0.9 |
| AE ∆% Dec-Jan | 83.7 | 90.8 | 83.2 | 17.9 | 12.4 |
| Nov | -1.0 | -1.3 | -1.3 | -0.5 | -0.6 |
| Oct | -0.2 | -0.4 | -0.5 | 0.4 | 0.4 |
| AE ∆% Oct-Nov | -7.0 | -9.7 | -10.3 | -0.6 | -1.2 |
| Sep | 0.7 | 0.7 | 0.6 | 1.5 | 1.3 |
| AE ∆% Sep | 8.7 | 8.7 | 7.4 | 19.6 | 16.8 |
| Aug | -2.9 | -3.4 | -3.7 | 1.0 | 0.7 |
| AE ∆% Aug | -29.8 | -34.0 | -36.4 | 12.7 | 8.7 |
| Jul | 0.9 | 0.9 | 0.6 | 1.7 | 1.4 |
| AE ∆% Jul | 11.4 | 11.4 | 7.4 | 22.4 | 18.2 |
| Jun | -0.9 | -1.2 | -1.7 | 6.4 | 5.9 |
| May | -4.0 | -4.7 | -4.9 | 8.6 | 8.5 |
| AE ∆% May-Jun | -25.9 | -30.3 | -33.3 | 138.0 | 130.1 |
| Apr | 12.5 | 15.1 | 15.7 | -12.6 | -12.2 |
| Mar | -1.9 | -1.7 | -1.5 | -6.9 | -6.7 |
| AE ∆% Mar-Apr | 80.7 | 109.8 | 119.1 | -71.0 | -69.8 |
| Feb | 0.7 | 0.7 | 0.6 | 0.1 | 0.0 |
| Jan | 1.1 | 1.1 | 0.9 | 0.6 | 0.4 |
| AE ∆% Jan-Feb | 11.3 | 11.3 | 9.4 | 4.3 | 2.4 |
| Dec 2019 | 0.0 | -0.1 | -0.3 | 0.1 | -0.1 |
| Nov | 0.5 | 0.5 | 0.4 | 0.4 | 0.3 |
| Oct | 0.4 | 0.3 | 0.1 | 0.3 | 0.1 |
| AE ∆% Oct-Dec | 3.7 | 2.8 | 0.8 | 3.2 | 1.2 |
| Sep | 0.2 | 0.3 | 0.2 | 0.2 | 0.1 |
| Aug | 0.5 | 0.6 | 0.5 | 0.3 | 0.3 |
| AE ∆% Aug-Sep | 4.3 | 5.5 | 4.3 | 3.0 | 2.4 |
| Jul | 0.1 | 0.3 | 0.1 | 0.4 | 0.3 |
| AE ∆% Jul | 1.2 | 3.7 | 1.2 | 4.9 | 3.7 |
| Jun | 0.2 | 0.2 | 0.1 | 0.4 | 0.3 |
| May | 0.1 | 0.0 | 0.0 | 0.3 | 0.2 |
| Apr | 0.1 | 0.0 | -0.4 | 0.6 | 0.2 |
| AE ∆% Apr-Jun | 1.6 | 0.8 | -1.2 | 5.3 | 2.8 |
| Mar | 0.3 | 0.2 | -0.1 | 0.9 | 0.6 |
| Feb | 0.4 | 0.3 | 0.2 | 0.1 | 0.0 |
| AE ∆% Feb-Mar | 4.3 | 3.0 | 0.6 | 6.2 | 3.7 |
| Jan | 0.2 | -0.1 | 0.0 | 0.4 | 0.4 |
| AE ∆% Jan | 2.4 | -1.2 | 0.0 | 4.9 | 4.9 |
Notes: *Excluding exceptional income gains in Nov and Dec 2012 because of anticipated tax increases in Jan 2013 ((page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). a Excluding employee contributions for government social insurance (pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf ) Excluding NPI: current dollars personal income; NDPI: current dollars disposable personal income; RDPI: chained (2005) dollars DPI; NPCE: current dollars personal consumption expenditures; RPCE: chained (2005) dollars PCE; AE: annual equivalent; IVQ2010: fourth quarter 2010; A: annual equivalent
Percentage change month to month seasonally adjusted
*∆% Dec 2011/Dec 2010 **∆% Dec 2010/Dec 2009 *** ∆% Dec 2012/Dec 2011
Source: US Bureau of Economic http://bea.gov/iTable/index_nipa.cfm
Table IB-12 provides year on year growth of real disposable income and real personal consumption expenditures and segments. Real disposable income changed 0.0 percent in the 12 months ending in Nov 2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf): “The estimate for November personal income and outlays reflected the continued economic recovery and government response to the COVID-19 pandemic. Government social benefits increased in November, reflecting an increase in the Provider Relief Fund (extended by the American Rescue Plan) that was partly offset by declines in many other pandemic-assistance programs. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see Effects of Selected Federal Pandemic Response Programs on Personal Income.” RPCE growth decelerated sharply to minus 2.2 percent in Feb 2021, increasing 7.4 percent in the 12 months ending in Nov 2021. Subdued growth of RPCE could affect revenues of business. Growth rates of personal consumption have weakened in oscillations. Goods and especially durable goods have been driving growth of PCE as shown by the much higher 12-month rates of growth of real goods PCE (RPCEG) and real durable goods PCE (RPCEGD) than services real PCE (RPCES). Growth of consumption of goods and, in particular, of consumer durable goods drives the faster expansion of the economy while growth of consumption of services is much more moderate. In Nov 2021, RPCEG increased 7.9 percent in 12 months and RPCEGD increased 7.7 percent while RPCES increased 7.1 percent. Government transfers through the stimulus program to compensate for the lockdown of economic activity caused sharp increases in Mar 2021. There are limits to sustained growth based on financial repression in an environment of weak labor markets and real labor remuneration.
Table IB-2, Real Disposable Personal Income and Real Personal Consumption Expenditures
Percentage Change from the Same Month a Year Earlier %
| RDPI | RPCE | RPCEG | RPCEGD | RPCES | |
| 2021 | |||||
| Nov | 0.0 | 7.4 | 7.9 | 7.7 | 7.1 |
| Oct | -1.0 | 6.7 | 7.4 | 7.2 | 6.4 |
| Sep | -1.2 | 6.4 | 6.1 | 5.4 | 6.5 |
| Aug | 1.0 | 7.5 | 8.1 | 6.5 | 7.2 |
| Jul | -2.6 | 7.5 | 6.7 | 7.0 | 7.9 |
| Jun | -2.8 | 9.3 | 11.2 | 14.4 | 8.4 |
| May | -4.1 | 15.1 | 17.1 | 25.9 | 14.0 |
| Apr | -6.0 | 25.4 | 37.3 | 70.5 | 19.7 |
| Mar | 28.8 | 9.6 | 21.1 | 53.2 | 4.1 |
| Feb | 3.2 | -2.2 | 9.1 | 16.9 | -7.2 |
| Jan | 13.4 | -0.8 | 12.8 | 21.7 | -6.8 |
| 2020 | |||||
| Dec | 3.7 | -3.3 | 5.5 | 10.2 | -7.2 |
| Nov | 3.2 | -2.4 | 7.9 | 13.4 | -7.1 |
| Oct | 5.0 | -1.6 | 9.6 | 16.8 | -6.6 |
| Sep | 5.6 | -1.9 | 9.5 | 14.7 | -7.0 |
| Aug | 5.3 | -3.1 | 7.3 | 14.4 | -7.7 |
| Jul | 9.8 | -3.5 | 8.0 | 14.5 | -8.5 |
| Jun | 9.3 | -4.6 | 6.7 | 12.6 | -9.5 |
| May | 11.3 | -9.6 | 1.3 | 4.0 | -14.4 |
| Apr | 17.0 | -16.4 | -10.8 | -17.7 | -18.9 |
| Mar | 0.8 | -4.7 | 2.0 | -7.8 | -7.6 |
| Feb | 2.2 | 2.8 | 4.2 | 7.7 | 2.1 |
| Jan | 1.8 | 2.8 | 4.1 | 8.2 | 2.2 |
| 2019 | |||||
| Dec | 0.8 | 2.8 | 5.2 | 8.6 | 1.8 |
| Nov | 2.3 | 1.9 | 2.5 | 4.3 | 1.7 |
| Oct | 2.0 | 2.0 | 3.4 | 4.5 | 1.4 |
| Sep | 2.1 | 2.4 | 3.9 | 5.6 | 1.7 |
| Aug | 1.8 | 2.2 | 3.8 | 4.3 | 1.5 |
| Jul | 1.6 | 2.2 | 3.7 | 4.4 | 1.5 |
| Jun | 1.9 | 2.2 | 3.8 | 3.8 | 1.5 |
| May | 2.1 | 2.1 | 2.8 | 3.6 | 1.8 |
| Apr | 2.4 | 2.1 | 3.3 | 3.6 | 1.6 |
| Mar | 3.0 | 2.3 | 3.3 | 4.1 | 1.8 |
| Feb | 3.5 | 2.0 | 2.0 | 1.6 | 2.0 |
| Jan | 3.5 | 2.1 | 2.6 | 2.6 | 1.8 |
Notes: RDPI: real disposable personal income; RPCE: real personal consumption expenditures (PCE); RPCEG: real PCE goods; RPCEGD: RPCEG durable goods; RPCES: RPCE services
Numbers are percentage changes from the same month a year earlier
Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-1 shows US real personal consumption expenditures (RPCE) from 2002 to 2021. There is an evident drop in RPCE during the global recession in 2007 to 2009 but the slope is flatter during the current recovery than in the period before 2007 with recent recovery. The final data points in IIQ2020 shows sharp drop in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) with sharp recovery in IIIQ2020 and milder recovery in IVQ2020. Recovery gained strength in IQ2021-IIQ2021, slowing in IIIQ2021.
Chart IB-1, US, Real Personal Consumption Expenditures, Quarterly Seasonally Adjusted at Annual Rates 2002-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Percent changes from the prior period in seasonally adjusted annual equivalent quarterly rates (SAAR) of real personal consumption expenditures (RPCE) are in Chart IB-2 from 1995 to 2021. The average rate could be visualized as a horizontal line. Although there are not yet sufficient observations, it appears from Chart IB-2 that the average rate of growth of RPCE was higher before the recession than during the forty-nine quarters of expansion that began in IIIQ2009. The data point in IIQ2020 shows sharp contraction in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) followed by sharp recovery in IIIQ2020, milder recovery in IVQ2020 and stronger recovery in IQ2021-IIQ2021, slowing in IIIQ2021.
Chart IB-2, Percent Change from Prior Period in Real Personal Consumption Expenditures, Quarterly Seasonally Adjusted at Annual Rates 1995-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Personal income and its disposition are in Table IB-3. The latest estimates and revisions have changed movements. (1) Increase in Oct 2021 of personal income by $90.4 billion or 0.4 percent and increase of disposable income of $70.4 billion or 0.4 percent with increase of wages and salaries of 0.5 percent in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf): “The estimate for November personal income and outlays reflected the continued economic recovery and government response to the COVID-19 pandemic. Government social benefits increased in November, reflecting an increase in the Provider Relief Fund (extended by the American Rescue Plan) that was partly offset by declines in many other pandemic-assistance programs. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified. For more information, see Effects of Selected Federal Pandemic Response Programs on Personal Income. The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase reflected increases in both private and government wages and salaries. Within government social benefits, an increase in "other" benefits (notably, an increase in the Provider Relief Fund to health care nonprofits) was partly offset by a decrease in unemployment insurance.” (2) Increase of personal income of $887.1 billion from Dec 2019 to Dec 2020 or 4.8 percent and increase of disposable income of $827.9 billion or 5.0 percent with increase of wages and salaries of 3.9 percent. (3) Increase of personal income of $538.0 billion from Dec 2018 to Dec 2019 or 3.0 percent and increase of disposable income of $402.1 billion or 2.5 percent with increase of wages and salaries of 4.7 percent.
Table IB-3, US, Personal Income and its Disposition, Seasonally Adjusted at Annual Rates USD Billions
| Personal | Wages & | Personal | DPI | Savings | |
| Nov 2021 | 20,868.2 | 10,665.5 | 2,699.4 | 18,168.8 | 6.9 |
| Oct 2021 | 20,777.8 | 10,615.7 | 2,679.4 | 18,098.4 | 7.1 |
| Change Nov 2021/ Oct 2021 | 90.4 ∆% 0.4 | 49.8 ∆% 0.5 | 20.0 ∆% 0.7 | 70.4 ∆% 0.4 | |
| Dec 2020 | 19,562.2 | 9,872.6 | 2,290.0 | 17,272.2 | 14.0 |
| Change Dec 2020/Dec 2019 | 887.1 ∆% 4.8 | 368.8 ∆% 3.9 | 59.2 ∆% 2.7 | 827.9 ∆% 5.0 | |
| Dec 2019 | 18,675.1 | 9,503.8 | 2,230.8 | 16,444.3 | 7.3 |
| Change Dec 2019/Dec 2018 | 538.0 ∆% 3.0 | 426.8 ∆% 4.7 | 135.9 ∆% 6.5 | 402.1 ∆% 2.5 | |
| Dec 2018 | 18,137.1 | 9,077.0 | 2,094.9 | 16,042.2 | 9.0 |
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Table IB-4 provides growth rates of real disposable income and real disposable income per capita in the long-term and selected periods. Real disposable income consists of after-tax income adjusted for inflation. Real disposable income per capita is income per person after taxes and inflation. There is remarkable long-term trend of growth of real disposable income of 3.2 percent per year on average from 1929 to 2019 and 2.0 percent in real disposable income per capita. Real disposable income increased at the average yearly rate of 3.7 percent from 1947 to 1999 and real disposable income per capita at 2.3 percent. These rates of increase broadly accompany rates of growth of GDP. Institutional arrangements in the United States provided the environment for growth of output and income after taxes, inflation and population growth. There is significant break of growth by much lower 2.5 percent for real disposable income on average from 1999 to 2019 and 1.6 percent in real disposable per capita income. Real disposable income grew at 3.5 percent from 1980 to 1989 and real disposable per capita income at 2.6 percent. In contrast, real disposable income grew at only 2.1 percent on average from 2006 to 2019 and real disposable income per capita at 1.4 percent. Real disposable income grew at 2.1 percent from 2007 to 2019 and real disposable income per capita at 1.4 percent. The United States has interrupted its long-term and cyclical dynamism of output, income and employment growth. Recovery of this dynamism could prove to be a major challenge. Cyclical uncommonly slow growth explains weakness in the global recession whole cycle instead of the allegation of secular stagnation. Real disposable income increased 6.2 percent from 2019 to 2020 and real disposable income per capita 5.7 percent in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).
Table IB-4, Average Annual Growth Rates of Real Disposable Income (RDPI) and Real Disposable Income per Capita (RDPIPC), Percent per Year
| RDPI Average ∆% | |
| 1929-2019 | 3.2 |
| 1929-2020 | 3.2 |
| 1947-1999 | 3.7 |
| 1999-2019 | 2.5 |
| 1999-2020 | 2.6 |
| 1999-2006 | 3.1 |
| 1980-1989 | 3.5 |
| 2006-2019 | 2.1 |
| 2006-2020 | 2.4 |
| 2007-2019 | 2.1 |
| 2007-2020 | 2.4 |
| 2019-2020* | 6.2 |
| RDPIPC Average ∆% | |
| 1929-2019 | 2.0 |
| 1929-2020 | 2.1 |
| 1947-1999 | 2.3 |
| 1999-2019 | 1.6 |
| 1999-2020 | 1.8 |
| 1999-2006 | 2.1 |
| 1980-1989 | 2.6 |
| 2006-2019 | 1.4 |
| 2006-2020 | 1.7 |
| 2007-2019 | 1.4 |
| 2007-2020 | 1.7 |
| 2019-2020* | 5.7 |
Note: *Absolute percentage change
Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-3 provides personal income in the US between 1980 and 1995. These data are not adjusted for inflation that was still high in the 1980s in the exit from the Great Inflation of the 1960s and 1970s (see http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html http://cmpassocregulationblog.blogspot.com/2014/07/financial-irrational-exuberance.html http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html). Personal income grew steadily during the 1980s after recovery from two recessions from Jan IQ1980 to Jul IIIQ1980 and from Jul IIIQ1981 to Nov IVQ1982. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).
Chart IB-3, US, Personal Income, Billion Dollars, Quarterly Seasonally Adjusted at Annual Rates, 1980-1995
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-4 provides personal income from 2007 to 2021. In IQ2013, personal income fell at the SAAR of minus 10.4 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.1 percent (Table 14 at https://www.bea.gov/system/files/2018-07/pi0618.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 6.3 percent, nominal disposable income at 5.9 percent and real disposable personal income at 4.4 percent (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IVQ2014, personal income grew at 5.3 percent in nominal terms while nominal disposable income grew at 4.9 percent in nominal terms and at 5.4 percent in real terms (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IQ2015, nominal personal income grew at 5.6 percent while nominal disposable income grew at 4.3 percent and at 6.1 percent in real terms (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2015, nominal personal income grew at 3.8 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2015, nominal personal income grew at 3.5 percent while nominal disposable income grew at 3.9 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2015, nominal personal income grew at 2.2 percent while nominal disposable income grew at 2.0 percent and real disposable income at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2016, personal income grew at 2.0 percent while nominal disposable income grew at 3.4 percent and real disposable income grew at 3.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2016, personal income grew at 2.4 percent while nominal disposable income grew at 2.1 percent and real disposable income fell at 0.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2016, personal income grew at 3.8 percent while nominal disposable income grew at 3.6 percent and real disposable income grew at 1.9 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2016, nominal personal income grew at 4.4 percent while disposable income grew at 4.4 percent and real disposable income increased at 2.5 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2017, nominal personal income grew at 6.1 percent while nominal disposable income grew at 6.6 percent and real disposable income at 4.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2017, nominal personal income grew at 4.8 percent while nominal disposable income grew at 5.3 percent and real disposable income at 2.4 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2017, nominal personal income grew at 5.0 percent while nominal disposable income grew at 4.4 percent and real disposable personal income grew at 2.7 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2017, nominal personal income grew at 6.2 percent while nominal disposable income grew at 5.0 percent and real disposable personal income grew at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2018, nominal personal income grew at 6.0 percent while nominal disposable income grew at 8.0 percent and real disposable income grew at 5.2 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2018, nominal personal income grew at 4.7 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.6 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2018, nominal personal income grew at 5.2 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2018, nominal personal income grew at 3.5 percent while nominal disposable income grew at 4.2 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2019, nominal personal income grew at 5.3 percent and at 3.3 real percent excluding transfer receipts while nominal disposable income grew at 3.9 percent and real disposable income grew at 3.3 percent (Table 6 at https://www.bea.gov/sites/default/files/2020-10/pi0820.pdf). In IIQ2019, nominal personal income grew at 2.5 percent and at minus 0.4 real percent excluding transfer receipts while nominal disposable income grew at 1.5 percent and real disposable income grew at minus 1.0 percent (Table 6 at https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf). In IIIQ2019, nominal personal income grew at 2.6 percent and at 1.0 real percent excluding transfer receipts while nominal disposable income grew at 3.5 percent and real disposable income grew at 2.1 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf). In IVQ2019, nominal personal income grew at 3.6 percent and at 2.4 percent real excluding current transfers while nominal disposable income grew at 3.4 percent and real disposable income grew at 1.9 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf). In IQ2020, nominal personal income grew at 4.2 percent and increased at 2.3 percent real excluding current transfers while nominal disposable income grew at 4.3 percent and real disposable income grew at 3.1 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf). In IIQ2020, nominal personal income grew at 36.0 percent and decreased at 19.7 percent real excluding current transfers while nominal disposable income grew at 46.1 percent and real disposable income grew at 48.5 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2020, nominal personal income decreased at 10.8 percent and increased at 16.0 percent real excluding current transfers while nominal disposable income decreased at 13.6 percent and real disposable income decreased at 16.6 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IVQ2020, nominal personal income decreased at 4.7 percent and increased at 9.3 percent real excluding current transfers while nominal disposable income decreased at 6.9 percent and real disposable income decreased at 8.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IQ2021, nominal personal income increased at 56.8 percent and decreased at 1.9 percent real excluding current transfers while nominal disposable income increased at 60.6 percent and real disposable income increased at 54.7 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIQ2021, nominal personal income decreased at 20.2 percent and increased at 5.2 percent real excluding current transfers while nominal disposable income decreased at 24.5 percent and real disposable income decreased at 29.1 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2021, nominal personal income increased at 2.5 percent and increased at 2.6 percent real excluding current transfers while nominal disposable income increased at 0.8 percent and real disposable income decreased at 4.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Chart IB-4, US, Personal Income, Current Billions of Dollars, Quarterly Seasonally Adjusted at Annual Rates, 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Real disposable income after allowing for taxes and inflation grew steadily at high rates during the entire decade as shown in Table IB-5. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).
Chart IB-5, US, Real Disposable Income, Billions of Chained 2012 Dollars, Quarterly Seasonally Adjusted at Annual Rates 1980-1995
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-6 provides real disposable income from 2007 to 2021. In IVQ2012, nominal disposable personal income grew at the SAAR of 13.3 percent and real disposable personal income at 10.9 percent (Table 2.1 http://bea.gov/iTable/index_nipa.cfm). The BEA explains as follows: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf). The Bureau of Economic Analysis explains as (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3): “The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf). There are revisions since 1929 (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf).
In IQ2013, personal income fell at the SAAR of minus 10.4 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.1 percent (Table 14 at https://www.bea.gov/system/files/2018-07/pi0618.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 6.3 percent, nominal disposable income at 5.9 percent and real disposable personal income at 4.4 percent (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IVQ2014, personal income grew at 5.3 percent in nominal terms while nominal disposable income grew at 4.9 percent in nominal terms and at 5.4 percent in real terms (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IQ2015, nominal personal income grew at 5.6 percent while nominal disposable income grew at 4.3 percent and at 6.1 percent in real terms (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2015, nominal personal income grew at 3.8 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2015, nominal personal income grew at 3.5 percent while nominal disposable income grew at 3.9 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2015, nominal personal income grew at 2.2 percent while nominal disposable income grew at 2.0 percent and real disposable income at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2016, personal income grew at 2.0 percent while nominal disposable income grew at 3.4 percent and real disposable income grew at 3.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2016, personal income grew at 2.4 percent while nominal disposable income grew at 2.1 percent and real disposable income fell at 0.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2016, personal income grew at 3.8 percent while nominal disposable income grew at 3.6 percent and real disposable income grew at 1.9 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2016, nominal personal income grew at 4.4 percent while disposable income grew at 4.4 percent and real disposable income increased at 2.5 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2017, nominal personal income grew at 6.1 percent while nominal disposable income grew at 6.6 percent and real disposable income at 4.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2017, nominal personal income grew at 4.8 percent while nominal disposable income grew at 5.3 percent and real disposable income at 2.4 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2017, nominal personal income grew at 5.0 percent while nominal disposable income grew at 4.4 percent and real disposable personal income grew at 2.7 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2017, nominal personal income grew at 6.2 percent while nominal disposable income grew at 5.0 percent and real disposable personal income grew at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2018, nominal personal income grew at 6.0 percent while nominal disposable income grew at 8.0 percent and real disposable income grew at 5.2 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2018, nominal personal income grew at 4.7 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.6 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2018, nominal personal income grew at 5.2 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2018, nominal personal income grew at 3.5 percent while nominal disposable income grew at 4.2 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2019, nominal personal income grew at 5.3 percent and at 3.3 real percent excluding transfer receipts while nominal disposable income grew at 3.9 percent and real disposable income grew at 3.3 percent (Table 6 at https://www.bea.gov/sites/default/files/2020-10/pi0820.pdf). In IIQ2020, nominal personal income grew at 36.0 percent and decreased at 19.7 percent real excluding current transfers while nominal disposable income grew at 46.1 percent and real disposable income grew at 48.5 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2020, nominal personal income decreased at 10.8 percent and increased at 16.0 percent real excluding current transfers while nominal disposable income decreased at 13.6 percent and real disposable income decreased at 16.6 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IVQ2020, nominal personal income decreased at 4.7 percent and increased at 9.3 percent real excluding current transfers while nominal disposable income decreased at 6.9 percent and real disposable income decreased at 8.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IQ2021, nominal personal income increased at 56.8 percent and decreased at 1.9 percent real excluding current transfers while nominal disposable income increased at 60.6 percent and real disposable income increased at 54.7 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIQ2021, nominal personal income decreased at 20.2 percent and increased at 5.2 percent real excluding current transfers while nominal disposable income decreased at 24.5 percent and real disposable income decreased at 29.1 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2021, nominal personal income increased at 2.5 percent and increased at 2.6 percent real excluding current transfers while nominal disposable income increased at 0.8 percent and real disposable income decreased at 4.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Chart IB-6, US, Real Disposable Income, Billions of Chained 2012 Dollars, Quarterly Seasonally Adjusted at Annual Rates, 2007-2021
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-7 provides percentage quarterly changes in real disposable income from the preceding period at seasonally adjusted annual rates from 1980 to 1995. Rates of changes were high during the decade with few negative changes. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).
Chart IB-7, US, Real Disposable Income Percentage Change from Preceding Period at Quarterly Seasonally Adjusted Annual Rates, 1980-1995
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-8 provides percentage quarterly changes in real disposable income from the preceding period at seasonally adjusted annual rates from 2007 to 2021. There has been a period of positive rates followed by decline of rates and then negative and low rates in 2011. Recovery in 2012 has not reproduced the dynamism of the brief early phase of expansion. In IVQ2012, nominal disposable personal income grew at the SAAR of 13.3 percent and real disposable personal income at 10.9 percent (Table 2.1 http://bea.gov/iTable/index_nipa.cfm). The BEA explains as follows: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf). The Bureau of Economic Analysis explains as (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3): “The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf). There are revisions since 1929 (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf).
In IQ2013, personal income fell at the SAAR of minus 10.4 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.1 percent (Table 14 at https://www.bea.gov/system/files/2018-07/pi0618.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 6.3 percent, nominal disposable income at 5.9 percent and real disposable personal income at 4.4 percent (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IVQ2014, personal income grew at 5.3 percent in nominal terms while nominal disposable income grew at 4.9 percent in nominal terms and at 5.4 percent in real terms (Table 14 at https://www.bea.gov/system/files/2019-07/pi0619.pdf). In IQ2015, nominal personal income grew at 5.6 percent while nominal disposable income grew at 4.3 percent and at 6.1 percent in real terms (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2015, nominal personal income grew at 3.8 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2015, nominal personal income grew at 3.5 percent while nominal disposable income grew at 3.9 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2015, nominal personal income grew at 2.2 percent while nominal disposable income grew at 2.0 percent and real disposable income at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2016, personal income grew at 2.0 percent while nominal disposable income grew at 3.4 percent and real disposable income grew at 3.1 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2016, personal income grew at 2.4 percent while nominal disposable income grew at 2.1 percent and real disposable income fell at 0.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2016, personal income grew at 3.8 percent while nominal disposable income grew at 3.6 percent and real disposable income grew at 1.9 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2016, nominal personal income grew at 4.4 percent while disposable income grew at 4.4 percent and real disposable income increased at 2.5 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2017, nominal personal income grew at 6.1 percent while nominal disposable income grew at 6.6 percent and real disposable income at 4.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2017, nominal personal income grew at 4.8 percent while nominal disposable income grew at 5.3 percent and real disposable income at 2.4 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2017, nominal personal income grew at 5.0 percent while nominal disposable income grew at 4.4 percent and real disposable personal income grew at 2.7 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2017, nominal personal income grew at 6.2 percent while nominal disposable income grew at 5.0 percent and real disposable personal income grew at 2.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2018, nominal personal income grew at 6.0 percent while nominal disposable income grew at 8.0 percent and real disposable income grew at 5.2 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIQ2018, nominal personal income grew at 4.7 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.6 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IIIQ2018, nominal personal income grew at 5.2 percent while nominal disposable income grew at 4.9 percent and real disposable income grew at 3.3 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IVQ2018, nominal personal income grew at 3.5 percent while nominal disposable income grew at 4.2 percent and real disposable income grew at 2.8 percent (Table 14 at https://www.bea.gov/sites/default/files/2020-07/pi0620.pdf). In IQ2019, nominal personal income grew at 5.3 percent and at 3.3 real percent excluding transfer receipts while nominal disposable income grew at 3.9 percent and real disposable income grew at 3.3 percent (Table 6 at https://www.bea.gov/sites/default/files/2020-10/pi0820.pdf). In IIQ2019, nominal personal income grew at 2.5 percent and at minus 0.4 real percent excluding transfer receipts while nominal disposable income grew at 1.5 percent and real disposable income grew at minus 1.0 percent (Table 6 at https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf). In IIIQ2019, nominal personal income grew at 2.6 percent and at 1.0 real percent excluding transfer receipts while nominal disposable income grew at 3.5 percent and real disposable income grew at 2.1 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf). In IVQ2019, nominal personal income grew at 3.6 percent and at 2.4 percent real excluding current transfers while nominal disposable income grew at 3.4 percent and real disposable income grew at 1.9 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf). In IQ2020, nominal personal income grew at 4.2 percent and increased at 2.3 percent real excluding current transfers while nominal disposable income grew at 4.3 percent and real disposable income grew at 3.1 percent (Table 6 at https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf). In IIQ2020, nominal personal income grew at 36.0 percent and decreased at 19.7 percent real excluding current transfers while nominal disposable income grew at 46.1 percent and real disposable income grew at 48.5 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2020, nominal personal income decreased at 10.8 percent and increased at 16.0 percent real excluding current transfers while nominal disposable income decreased at 13.6 percent and real disposable income decreased at 16.6 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IVQ2020, nominal personal income decreased at 4.7 percent and increased at 9.3 percent real excluding current transfers while nominal disposable income decreased at 6.9 percent and real disposable income decreased at 8.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IQ2021, nominal personal income increased at 56.8 percent and decreased at 1.9 percent real excluding current transfers while nominal disposable income increased at 60.6 percent and real disposable income increased at 54.7 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIQ2021, nominal personal income decreased at 20.2 percent and increased at 5.2 percent real excluding current transfers while nominal disposable income decreased at 24.5 percent and real disposable income decreased at 29.1 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In IIIQ2021, nominal personal income increased at 2.5 percent and increased at 2.6 percent real excluding current transfers while nominal disposable income increased at 0.8 percent and real disposable income decreased at 4.3 percent (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Chart, IB-8, US, Real Disposable Income, Percentage Change from Preceding Period at Seasonally Adjusted Annual Rates, 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
The Bureau of Economic Analysis (BEA) estimates US personal income in Nov 2021 at the seasonally adjusted annual rate of $20,868.2 billion, as shown in Table IB-3 above (see Table 1 at https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). The major portion of personal income is compensation of employees of $12,957.4 billion, or 62.1 percent of the total. Wages and salaries are $10,665.5 billion, of which $9,104.9 billion by private industries and supplements to wages and salaries of $2,291.9 billion (contributions to government social insurance are $748.6 billion). “Other government social benefits to persons” are $928.5 billion in Nov 2021 compared with $604.3 billion in Dec 2020, $2317.0 billion in Jan 2021, with $3,379.3 billion in Apr 2020, $4,706.0 billion in Mar 2021, $1345.4 billion in Apr 2021, $806.5 billion in May 2021, $744.3 billion in Jun 2021, $919.0 billion in Jul 2021, $940.3 billion in Aug 2021, $889.2 billion in Sep 2021 and $889.1 billion in Oct 2021 (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). In Apr 1995 (at the comparable month after the 49th quarter of cyclical expansion), US personal income was $6,231.3 billion at SAAR (https://apps.bea.gov/iTable/index_nipa.cfm). Compensation of employees was $4,168.4
billion, or 66.9 percent of the total. Wages and salaries were $3,390.8 billion of which $2,764.8 billion by private industries. Supplements to wages and salaries were $777.6 billion with employer contributions to pension and insurance funds of $514.9 billion and $262.6 billion to government social insurance. Chart IB-9 provides US wages and salaries by private industries in the 1980s and 1990-1994. Growth was robust after the interruption of the recessions. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).
Chart IB-9, US, Wages and Salaries, Private Industries, Quarterly, Seasonally Adjusted at Annual Rates Billions of Dollars, 1980-1995
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
The Bureau of Economic Analysis (BEA) estimates US personal income in Nov 2021 at the seasonally adjusted annual rate of $20,868.2 billion, as shown in Table IB-3 above (see Table 1 at https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). The major portion of personal income is compensation of employees of $12,957.4 billion, or 62.1 percent of the total. Wages and salaries are $10,665.5 billion, of which $9,104.9 billion by private industries and supplements to wages and salaries of $2,291.9 billion (contributions to government social insurance are $748.6 billion). “Other government social benefits to persons” are $928.5 billion in Nov 2021 compared with $604.3 billion in Dec 2020, $2317.0 billion in Jan 2021, with $3,379.3 billion in Apr 2020, $4,706.0 billion in Mar 2021, $1345.4 billion in Apr 2021, $806.5 billion in May 2021, $744.3 billion in Jun 2021, $919.0 billion in Jul 2021, $940.3 billion in Aug 2021, $889.2 billion in Sep 2021 and $889.1 billion in Oct 2021 (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf). Chart IB-10 provides US wages and salaries by private industries since 2007. Growth was mediocre in the cyclically weak expansion phase after IIIQ2009.
Chart IB-10, US, Wage and Salary Disbursement, Private Industries, Quarterly, Seasonally Adjusted at Annual Rates, Billions of Dollars 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-11 provides finer detail with monthly wages and salaries of private industries from 2007 to 2021. Anticipations of income in late 2012 to avoid tax increases in 2013 cloud comparisons. There is sharp contraction in Mar-Apr 2020 with recovery after May 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).
Chart IB-11, US, Wages and Salaries, Private Industries, Monthly, Seasonally Adjusted at Annual Rates, Billions of Dollars 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-12 provides monthly real disposable personal income per capita from 1980 to 1995. This is the ultimate measure of wellbeing in receiving income by obtaining the value per inhabitant. The measure cannot adjust for the distribution of income. Real disposable income per capita grew rapidly during the expansion after 1983 and continued growing during the rest of the decade. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).
Chart IB-12, US, Real Disposable Per Capita Income, Monthly, Seasonally Adjusted at Annual Rates, Chained 2012 Dollars 1980-1995
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Table IB-5 provides the comparison between the cycle of the 1980s and the current cycle. Real per capita disposable income (RDPI-PC) increased 29.3 percent from Dec 1979 to Aug 1993. In the comparable period in the current cycle from Dec 2007 to Feb 2020, real per capita disposable income increased 20.0 percent. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). In the comparable period in the current cycle from Dec 2007 to Feb 2020, real per capita disposable income increased 20.0 percent. The YOY increase of real per capita income in Mar 2020 of 0.3 percent, the increase of 16.4 percent in Apr 2020, the increase of 10.8 percent in May 2020, the increase of 8.8 percent in Jun 2020, the increase of 9.3 percent in Jul 2020, the increase of 4.7 percent in Aug 2020, the increase of 5.1 percent in Sep 2020, the increase of 4.5 percent in Oct 2020, the increase of 2.7 percent in Nov 2020, the increase of 3.2 percent in Dec 2020, the increase in 12.9 percent in Jan 2021, the increase of 2.7 percent in Feb 2021, the increase of 28.2 percent in Mar 2021, the decrease of 6.3 percent in Apr 2021, the decrease of 4.4 percent in May 202, the decrease of 3.2 percent in Jun 2021, the decrease of 3.0 percent in Jul 2021, the increase of 0.7 percent in Aug 2021, the decrease of 1.5 percent in Sep 2021, the decrease of 1.3 percent in Oct 2021 and the decrease of 0.2 percent in Nov 2021 reflect government transfers of social benefits in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-11/pi1020.pdf): “The decrease in personal income in October was led by a decrease in government social benefits (table 3). Within government social benefits, “other” social benefits decreased which primarily reflected a decrease in Lost Wages Supplemental Payments, a Federal Emergency Management Agency program that provides wage assistance to individuals impacted by the pandemic. Offsetting the decrease in government social benefits were increases in compensation and proprietors’ income (led by farm). Within compensation, an increase in private wages and salaries was partly offset by a decrease in government wages and salaries, which decreased $8.4 billion in October, following a decrease of $8.2 billion in September and an increase of $22.8 billion in August. Temporary and intermittent decennial Census workers boosted government wages by $3.7 billion in October after adding $9.3 billion in September and $10.9 billion in August. Within farm proprietors’ income, there was an increase in payments under the Coronavirus Food Assistance Program related to supporting farmers and ranchers impacted by COVID-19.” There is further explanation by the BEA (https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf https://www.bea.gov/sites/default/files/2021-01/pi1220.pdf https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf)
Table IB-5, Percentage Changes of Real Disposable Personal Income Per Capita
| Month | RDPI-PC ∆% 12/79 | RDPI-PC ∆% YOY | Month | RDPI-PC ∆% 12/07 | RDPI-PC ∆% YOY |
| 11/1982 | 2.7 | 0.6 | 6/2009 | -0.8 | -2.1 |
| 12/1982 | 3.1 | 1.2 | 9/2009 | -1.4 | -0.5 |
| 12/1983 | 8.2 | 5.0 | 6/2010 | 0.8 | 1.6 |
| 12/1987 | 20.6 | 2.8 | 6/2014 | 5.4 | 2.8 |
| 1/1988 | 20.8 | 2.6 | 7/2014 | 5.7 | 3.2 |
| 2/1988 | 21.4 | 2.7 | 8/2014 | 6.1 | 3.4 |
| 3/1988 | 21.9 | 3.0 | 9/2014 | 6.4 | 3.3 |
| 4/1988 | 22.2 | 7.4 | 10/2014 | 6.8 | 4.1 |
| 5/1988 | 22.3 | 3.3 | 11/2014 | 7.2 | 4.4 |
| 6/1988 | 22.6 | 3.8 | 12/2014 | 7.9 | 4.8 |
| 6/1989 | 24.5 | 1.6 | 12/2015 | 9.8 | 1.8 |
| 6/1990 | 26.9 | 1.9 | 12/2016 | 10.7 | 0.8 |
| 6/1991 | 25.7 | -0.9 | 12/2017 | 13.5 | 2.5 |
| 6/1992 | 29.5 | 3.0 | 12/2018 | 17.8 | 3.8 |
| 7/1992 | 29.2 | 3.1 | 1/2019 | 17.8 | 3.0 |
| 8/1992 | 29.5 | 3.3 | 2/2019 | 17.9 | 2.9 |
| 9/1992 | 28.8 | 2.5 | 3/2019 | 17.8 | 2.5 |
| 10/1992 | 27.8 | 1.7 | 04/2019 | 17.3 | 1.9 |
| 11/1992 | 27.9 | 1.7 | 05/2019 | 17.3 | 1.6 |
| 12/1992 | 32.3 | 4.4 | 06/2019 | 17.3 | 1.4 |
| 1/1993 | 29.3 | 1.1 | 07/2019 | 17.4 | 1.2 |
| 2/1993 | 29.8 | 1.1 | 08/2019 | 17.9 | 1.4 |
| 3/1993 | 29.2 | 0.7 | 09/2019 | 18.1 | 1.6 |
| 4/1993 | 29.8 | 0.9 | 10/2019 | 18.2 | 1.5 |
| 5/1993 | 29.4 | 0.3 | 11/2019 | 18.6 | 1.8 |
| 6/1993 | 29.1 | -0.3 | 12/2019 | 18.3 | 0.4 |
| 7/1993 | 29.2 | 0.0 | 1/2020 | 19.3 | 1.3 |
| 8/1993 | 29.3 | -0.2 | 2/2020 | 20.0 | 1.7 |
| 9/1993 | 28.8 | 0.0 | 3/2020 | 18.1 | 0.3 |
| 10/1993 | 28.0 | 0.2 | 4/2020 | 36.6 | 16.4 |
| 11/1993 | 28.2 | 0.3 | 5/2020 | 29.9 | 10.8 |
| 12/1993 | 32.5 | 0.2 | 6/2020 | 27.6 | 8.8 |
| 1/1994 | 29.9 | 0.5 | 7/2020 | 28.3 | 9.3 |
| 2/1994 | 30.0 | 0.2 | 8/2020 | 23.5 | 4.7 |
| 3/1994 | 30.3 | 0.9 | 9/2020 | 24.2 | 5.1 |
| 4/1994 | 30.2 | 0.3 | 10/2020 | 23.5 | 4.5 |
| 5/1994 | 31.6 | 1.7 | 11/2020 | 21.9 | 2.7 |
| 6/1994 | 31.2 | 1.7 | 12/2020 | 22.0 | 3.2 |
| 7/1994 | 31.2 | 1.5 | 1/2021 | 34.7 | 12.9 |
| 8/1994 | 31.2 | 1.5 | 2/2021 | 23.2 | 2.7 |
| 9/1994 | 31.6 | 2.2 | 3/2021 | 51.5 | 28.2 |
| 10/1994 | 32.8 | 3.7 | 4/2021 | 27.9 | -6.3 |
| 11/1994 | 32.6 | 3.4 | 5/2021 | 24.1 | -4.4 |
| 12/1994 | 33.1 | 0.5 | 6/2021 | 23.6 | -3.2 |
| 1/1995 | 33.4 | 2.7 | 7/2021 | 24.5 | -3.0 |
| 2/1995 | 33.6 | 2.7 | 8/2021 | 24.3 | 0.7 |
| 3/1995 | 33.8 | 2.7 | 9/2021 | 22.3 | -1.5 |
| 4/1995 | 32.7 | 1.9 | 10/2021 | 21.9 | -1.3 |
| 5/1995 | 33.9 | 1.8 | 11/2021 | 21.6 | -0.2 |
RDPI: Real Disposable Personal Income; RDPI-PC, Real Disposable Personal Income Per Capita
Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm
National Bureau of Economic Research
https://www.nber.org/cycles.html
Chart IB-13 provides monthly real disposable personal income per capita from 2007 to 2021. There was initial recovery from the drop during the global recession followed by relative cyclical weakness. There is increase of 0.5 percent in Sep 2020 followed by decrease of 0.5 percent in Oct 2020, contraction of 1.3 percent in Nov 2020, increase of 0.1 percent in Dec 2020, increase of 10.3 percent in Jan 2021, decrease of 8.5 percent in Feb 2020, increase of 22.9 percent in Mar 2021, decrease of 15.6 percent in Apr 2021, decrease of 3.0 percent in May 2021, decrease of 0.5 percent in Jun 2021, increase of 0.8 percent in Jul 2021, decrease of 0.1 percent in Aug 2021, decrease of 1.7 percent in Sep 2021, decrease of 0.4 percent in Oct 2021 and decrease of 0.2 percent in Nov 2021 with government transfers of social benefits in the lockdown of economic activity in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), in the lockdown of economic activity in the COVID-19 event, followed by sharp increase in Apr 2020. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-11/pi1020.pdf): “The decrease in personal income in October was led by a decrease in government social benefits (table 3). Within government social benefits, “other” social benefits decreased which primarily reflected a decrease in Lost Wages Supplemental Payments, a Federal Emergency Management Agency program that provides wage assistance to individuals impacted by the pandemic. Offsetting the decrease in government social benefits were increases in compensation and proprietors’ income (led by farm). Within compensation, an increase in private wages and salaries was partly offset by a decrease in government wages and salaries, which decreased $8.4 billion in October, following a decrease of $8.2 billion in September and an increase of $22.8 billion in August. Temporary and intermittent decennial Census workers boosted government wages by $3.7 billion in October after adding $9.3 billion in September and $10.9 billion in August. Within farm proprietors’ income, there was an increase in payments under the Coronavirus Food Assistance Program related to supporting farmers and ranchers impacted by COVID-19.” There is further explanation (https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf https://www.bea.gov/sites/default/files/2021-01/pi1220.pdf https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf)
Chart IB-13, US, Real Disposable Per Capita Income, Monthly, Seasonally Adjusted at Annual Rates, Chained 2012 Dollars 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Table IB-6 provides data for analysis of the current cycle. Real disposable income (RDPI) increased 30.4 percent from Dec 2007 to Feb 2020 (column RDPI ∆% 12/07). In the same period, real disposable income per capita increased 20.0 percent (column RDPI-PC ∆% 12/07). The annual equivalent rate of increase of real disposable income per capita is 1.5 percent, only a fraction of 2.0 percent on average from 1929 to 2019, and 2.2 percent for real disposable income, much lower than 3.2 percent on average from 1929 to 2019. Real disposable income (RDPI) increased 33.1 percent from Dec 2007 to Nov 2021 (column RDPI ∆% 12/07). In the same period, real disposable income per capita increased 21.6 percent (column RDPI-PC ∆% 12/07). Contraction of real disposable income of 8.5 percent in Feb 2021 and contraction of 8.5 percent of real disposable income per capita occur during government social transfers in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), in the lockdown of economic activity in the COVID-19 event. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-11/pi1020.pdf): “The decrease in personal income in October was led by a decrease in government social benefits (table 3). Within government social benefits, “other” social benefits decreased which primarily reflected a decrease in Lost Wages Supplemental Payments, a Federal Emergency Management Agency program that provides wage assistance to individuals impacted by the pandemic. Offsetting the decrease in government social benefits were increases in compensation and proprietors’ income (led by farm). Within compensation, an increase in private wages and salaries was partly offset
by a decrease in government wages and salaries, which decreased $8.4 billion in October, following a decrease of $8.2 billion in September and an increase of $22.8 billion in August. Temporary and intermittent decennial Census workers boosted government wages by $3.7 billion in October after adding $9.3 billion in September and $10.9 billion in August. Within farm proprietors’ income, there was an increase in payments under the Coronavirus Food Assistance Program related to supporting farmers and ranchers impacted by COVID-19.” There is further explanation (https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf https://www.bea.gov/sites/default/files/2021-01/pi1220.pdf https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Table IB-6, Percentage Changes of Real Disposable Personal Income and Real Disposable Personal Income Per Capita
| Month | RDPI | RDPI ∆% Month | RDPI ∆% YOY | RDPI-PC ∆% 12/07 | RDPI-PC ∆% Month | RDPI-PC ∆% YOY |
| 6/09 | 0.5 | -1.8 | -1.2 | -0.8 | -1.9 | -2.1 |
| 9/09 | 0.2 | 0.3 | 0.4 | -1.4 | 0.2 | -0.5 |
| 6/10 | 3.0 | 0.1 | 2.4 | 0.8 | 0.0 | 1.6 |
| 12/10 | 4.1 | 0.6 | 3.4 | 1.5 | 0.5 | 2.7 |
| 6/11 | 4.6 | 0.4 | 1.6 | 1.7 | 0.3 | 0.9 |
| 12/11 | 5.8 | 0.9 | 1.6 | 2.5 | 0.9 | 0.9 |
| 6/12 | 8.1 | -0.1 | 3.3 | 4.3 | -0.1 | 2.5 |
| 10/12 | 8.5 | 0.7 | 3.5 | 4.5 | 0.6 | 2.8 |
| 11/12 | 10.0 | 1.3 | 4.9 | 5.8 | 1.3 | 4.1 |
| 12/12 | 12.6 | 2.4 | 6.4 | 8.3 | 2.4 | 5.7 |
| 6/13 | 7.0 | 0.0 | -1.0 | 2.6 | 0.0 | -1.6 |
| 12/13 | 7.8 | 0.2 | -4.3 | 2.9 | 0.2 | -4.9 |
| 1/14 | 8.3 | 0.5 | 2.1 | 3.4 | 0.4 | 1.4 |
| 2/14 | 8.9 | 0.5 | 2.9 | 3.9 | 0.5 | 2.2 |
| 3/14 | 9.5 | 0.5 | 3.2 | 4.4 | 0.5 | 2.4 |
| 4/14 | 9.9 | 0.4 | 3.3 | 4.7 | 0.3 | 2.5 |
| 5/14 | 10.3 | 0.4 | 3.1 | 5.1 | 0.3 | 2.4 |
| 6/14 | 10.8 | 0.4 | 3.5 | 5.4 | 0.3 | 2.8 |
| 7/14 | 11.1 | 0.3 | 3.9 | 5.7 | 0.2 | 3.2 |
| 8/14 | 11.6 | 0.5 | 4.2 | 6.1 | 0.4 | 3.4 |
| 9/14 | 12.0 | 0.3 | 4.1 | 6.4 | 0.3 | 3.3 |
| 10/14 | 12.5 | 0.4 | 4.8 | 6.8 | 0.4 | 4.1 |
| 11/14 | 13.1 | 0.5 | 5.1 | 7.2 | 0.5 | 4.4 |
| 12/14 | 13.8 | 0.7 | 5.6 | 7.9 | 0.6 | 4.8 |
| 12/15 | 16.7 | 0.5 | 2.5 | 9.8 | 0.4 | 1.8 |
| 12/16 | 18.5 | 0.2 | 1.5 | 10.7 | 0.1 | 0.8 |
| 12/17 | 22.2 | 0.2 | 3.1 | 13.5 | 0.2 | 2.5 |
| 12/18 | 27.4 | 1.2 | 4.3 | 17.8 | 1.1 | 3.8 |
| 1/19 | 27.4 | 0.0 | 3.5 | 17.8 | -0.1 | 3.0 |
| 2/19 | 27.6 | 0.2 | 3.5 | 17.9 | 0.2 | 2.9 |
| 3/19 | 27.5 | -0.1 | 3.0 | 17.8 | -0.1 | 2.5 |
| 04/19 | 27.1 | -0.4 | 2.4 | 17.3 | -0.4 | 1.9 |
| 05/19 | 27.0 | 0.0 | 2.1 | 17.3 | -0.1 | 1.6 |
| 06/19 | 27.1 | 0.1 | 1.9 | 17.3 | 0.0 | 1.4 |
| 07/19 | 27.3 | 0.1 | 1.6 | 17.4 | 0.1 | 1.2 |
| 08/19 | 27.9 | 0.5 | 1.8 | 17.9 | 0.5 | 1.4 |
| 09/19 | 28.2 | 0.2 | 2.1 | 18.1 | 0.2 | 1.6 |
| 10/19 | 28.3 | 0.1 | 2.0 | 18.2 | 0.0 | 1.5 |
| 11/19 | 28.9 | 0.4 | 2.3 | 18.6 | 0.4 | 1.8 |
| 12/19 | 28.5 | -0.3 | 0.8 | 18.3 | -0.3 | 0.4 |
| 01/20 | 29.6 | 0.9 | 1.8 | 19.3 | 0.9 | 1.3 |
| 02/20 | 30.4 | 0.6 | 2.2 | 20.0 | 0.6 | 1.7 |
| 03/20 | 28.5 | -1.5 | 0.8 | 18.1 | -1.5 | 0.3 |
| 04/20 | 48.6 | 15.7 | 17.0 | 36.6 | 15.6 | 16.4 |
| 05/20 | 41.4 | -4.9 | 11.3 | 29.9 | -4.9 | 10.8 |
| 06/20 | 39.0 | -1.7 | 9.3 | 27.6 | -1.7 | 8.8 |
| 07/20 | 39.8 | 0.6 | 9.8 | 28.3 | 0.5 | 9.3 |
| 08/20 | 34.6 | -3.7 | 5.3 | 23.5 | -3.8 | 4.7 |
| 09/20 | 35.4 | 0.6 | 5.6 | 24.2 | 0.5 | 5.1 |
| 10/20 | 34.8 | -0.5 | 5.0 | 23.5 | -0.5 | 4.5 |
| 11/20 | 33.0 | -1.3 | 3.2 | 21.9 | -1.3 | 2.7 |
| 12/20 | 33.3 | 0.2 | 3.7 | 22.0 | 0.1 | 3.2 |
| 01/21 | 47.1 | 10.4 | 13.4 | 34.7 | 10.3 | 12.9 |
| 02/21 | 34.6 | -8.5 | 3.2 | 23.2 | -8.5 | 2.7 |
| 03/21 | 65.5 | 23.0 | 28.8 | 51.5 | 22.9 | 28.2 |
| 04/21 | 39.8 | -15.5 | -6.0 | 27.9 | -15.6 | -6.3 |
| 05/21 | 35.6 | -3.0 | -4.1 | 24.1 | -3.0 | -4.4 |
| 06/21 | 35.1 | -0.4 | -2.8 | 23.6 | -0.5 | -3.2 |
| 07/21 | 36.2 | 0.8 | -2.6 | 24.5 | 0.8 | -3.0 |
| 08/21 | 36.0 | -0.1 | 1.0 | 24.3 | -0.1 | 0.7 |
| 09/21 | 33.8 | -1.6 | -1.2 | 22.3 | -1.7 | -1.5 |
| 10/21 | 33.4 | -0.3 | -1.0 | 21.9 | -0.4 | -1.3 |
| 11/21 | 33.1 | -0.2 | 0.0 | 21.6 | -0.2 | -0.2 |
RDPI: Real Disposable Personal Income; RDPI-PC, Real Disposable Personal Income Per Capita
Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm
National Bureau of Economic Research
https://www.nber.org/cycles.html
IA2 Financial Repression. McKinnon (1973) and Shaw (1974) argue that legal restrictions on financial institutions can be detrimental to economic development. “Financial repression” is the term used in the economic literature for these restrictions (see Pelaez and Pelaez, Globalization and the State, Vol. II (2008b), 81-6; for historical analysis see the landmark exhaustive research by Summerhill (2015) and earlier research by Pelaez (1975)). Theory and evidence support the role of financial institutions in efficiency and growth (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 22-6, Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 37-44). Excessive official regulation frustrates financial development required for growth (Haber 2011). Emphasis on disclosure can reduce bank fragility and corruption, empowering investors to enforce sound governance (Barth, Caprio and Levine 2006). Banking was important in facilitating economic growth in historical periods (Cameron 1961, 1967, 1972; Cameron et al. 1992). Banking is also important currently because small- and medium-size business may have no other form of financing than banks in contrast with many options for larger and more mature companies that have access to capital markets. Calomiris and Haber (2014) find that broad voting rights and institutions restricting coalitions of bankers and populists ensure stable banking systems and access to credit. Summerhill (2015) contributes momentous solid facts and analysis with an ideal method combining economic theory, econometrics, international comparisons, data reconstruction and exhaustive archival research. Summerhill (2015) finds that Brazil committed to service of sovereign foreign and internal debt. Contrary to conventional wisdom, Brazil generated primary fiscal surpluses during most of the Empire until 1889 (Summerhill 2015, 37-8, Figure 2.1). Econometric tests by Summerhill (2015, 19-44) show that Brazil’s sovereign debt was sustainable. Sovereign credibility in the North-Weingast (1989) sense spread to financial development that provided the capital for modernization in England and parts of Europe (see Cameron 1961, 1967). Summerhill (2015, 3,194-6, Figure 7.1) finds that “Brazil’s annual cost of capital in London fell from a peak of 13.9 percent in 1829 to only 5.12 percent in 1889. Average rates on secured loans in the private sector in Rio, however, remained well above 12 percent through 1850.” Financial development would have financed diversification of economic activities, increasing productivity and wages and ensuring economic growth. Brazil restricted creation of limited liability enterprises (Summerhill 2015, 151-82) that prevented raising capital with issue of stocks and corporate bonds. Cameron (1961) analyzed how the industrial revolution in England spread to France and then to the rest of Europe. The Société Générale de Crédit Mobilier of Émile and Isaac Péreire provided the “mobilization of credit” for the new economic activities (Cameron 1961). Summerhill (2015, 151-9) provides facts and analysis demonstrating that regulation prevented the creation of a similar vehicle for financing modernization by Irineu Evangelista de Souza, the legendary Visconde de Mauá. Regulation also prevented the use of negotiable bearing notes of the Caisse Générale of Jacques Lafitte (Cameron 1961, 118-9). The government also restricted establishment and independent operation of banks (Summerhill 2015, 183-214). Summerhill (2015, 198-9) measures concentration in banking that provided economic rents or a social loss. The facts and analysis of Summerhill (2015) provide convincing evidence in support of the economic theory of regulation, which postulates that regulated entities capture the process of regulation to promote their self-interest. There appears to be a case that excessively centralized government can result in regulation favoring private instead of public interests with adverse effects on economic activity. The contribution of Summerhill (2015) explains why Brazil did not benefit from trade as an engine of growth—as did regions of recent settlement in the vision of nineteenth-century trade and development of Ragnar Nurkse (1959)—partly because of restrictions on financing and incorporation. Interest rate ceilings on deposits and loans have been commonly used. Professor Rondo E. Cameron, in his memorable A Concise Economic History of the World (Cameron 1989, 307-8), finds that “from a broad spectrum of possible forms of interaction between the financial sector and other sectors of the economy that requires its services, one can isolate three type-cases: (1) that in which the financial sector plays a positive, growth-inducing role; (2) that in which the financial sector is essentially neutral or merely permissive; and (3) that in which inadequate finance restricts or hinders industrial and commercial development.” Summerhill (1985) proves exhaustively that Brazil failed to modernize earlier because of the restrictions of an inadequate institutional financial arrangement plagued by regulatory capture for self-interest. The Banking Act of 1933 imposed prohibition of payment of interest on demand deposits and ceilings on interest rates on time deposits. These measures were justified by arguments that the banking panic of the 1930s was caused by competitive rates on bank deposits that led banks to engage in high-risk loans (Friedman, 1970, 18; see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 74-5). The objective of policy was to prevent unsound loans in banks. Savings and loan institutions complained of unfair competition from commercial banks that led to continuing controls with the objective of directing savings toward residential construction. Friedman (1970, 15) argues that controls were passive during periods when rates implied on demand deposit were zero or lower and when Regulation Q ceilings on time deposits were above market rates on time deposits. The Great Inflation or stagflation of the 1960s and 1970s changed the relevance of Regulation Q.
Most regulatory actions trigger compensatory measures by the private sector that result in outcomes that are different from those intended by regulation (Kydland and Prescott 1977). Banks offered services to their customers and loans at rates lower than market rates to compensate for the prohibition to pay interest on demand deposits (Friedman 1970, 24). The prohibition of interest on demand deposits was eventually lifted in recent times. In the second half of the 1960s, already in the beginning of the Great Inflation (DeLong 1997), market rates rose above the ceilings of Regulation Q because of higher inflation. Nobody desires savings allocated to time or savings deposits that pay less than expected inflation. This is a fact currently with near zero nominal interest rates, 0 to ¼ percent, and consumer price inflation of 5.4 percent in the 12 months ending in Sep 2021 (https://www.bls.gov/cpi/) but rising during waves of carry trades from zero interest rates to commodity futures exposures (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/11/us-gdp-growing-at-21-saar-in-iiiq2021.html). Funding problems motivated compensatory measures by banks. Money-center banks developed the large certificate of deposit (CD) to accommodate increasing volumes of loan demand by customers. As Friedman (1970, 25) finds:
“Large negotiable CD’s were particularly hard hit by the interest rate ceiling because they are deposits of financially sophisticated individuals and institutions who have many alternatives. As already noted, they declined from a peak of $24 billion in mid-December, 1968, to less than $12 billion in early October, 1969.”
Banks created different liabilities to compensate for the decline in CDs. As Friedman (1970, 25; 1969) explains:
“The most important single replacement was almost surely ‘liabilities of US banks to foreign branches.’ Prevented from paying a market interest rate on liabilities of home offices in the United States (except to foreign official institutions that are exempt from Regulation Q), the major US banks discovered that they could do so by using the Euro-dollar market. Their European branches could accept time deposits, either on book account or as negotiable CD’s at whatever rate was required to attract them and match them on the asset side of their balance sheet with ‘due from head office.’ The head office could substitute the liability ‘due to foreign branches’ for the liability ‘due on CDs.”
Friedman (1970, 26-7) predicted the future:
“The banks have been forced into costly structural readjustments, the European banking system has been given an unnecessary competitive advantage, and London has been artificially strengthened as a financial center at the expense of New York.”
In short, Depression regulation exported the US financial system to London and offshore centers. What is vividly relevant currently from this experience is the argument by Friedman (1970, 27) that the controls affected the most people with lower incomes and wealth who were forced into accepting controlled-rates on their savings that were lower than those that would be obtained under freer markets. As Friedman (1970, 27) argues:
“These are the people who have the fewest alternative ways to invest their limited assets and are least sophisticated about the alternatives.”
Chart IB-14 of the Bureau of Economic Analysis (BEA) provides quarterly savings as percent of disposable income or the US savings rate from 1980 to 2021. There was a long-term downward sloping trend from 12 percent in the early 1980s to 2.2 percent in Jul 2005. The savings rate then rose during the contraction and in the expansion. In 2011 and into 2012 the savings rate declined as consumption is financed with savings in part because of the disincentive or frustration of receiving a few pennies for every $10,000 of deposits in a bank. The savings rate increased in the final segment of Chart IB-14 in 2012 because of the “fiscal cliff” episode followed by another decline because of the pain of the opportunity cost of zero remuneration for hard-earned savings. There are multiple recent oscillations during expectations of increase or “liftoff” of the fed funds rate in the United States followed by “shallow” or uncertain monetary policy with increase in policy interest rates and reduction of the balance sheet of the Fed. The savings rate increased in the final segment with the annual revisions of 2019 and 2020. The savings rate jumped followed by decline in the lockdown of economic activity of the COVID-19 event. The BEA explains as follows (https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf): “The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase reflected increases in both private and government wages and salaries. Within government social benefits, an increase in "other" benefits (notably, an increase in the Provider Relief Fund to health care nonprofits) was partly offset by a decrease in unemployment insurance. The $104.7 billion increase in current-dollar PCE in November reflected an increase of $97.4 billion in spending for services and a $7.4 billion increase in spending for goods (table 3). The increase in services was widespread, led by housing and utilities. Within goods, an increase in nondurable goods (mainly gasoline and other energy goods) was partly offset by a decrease in durable goods (led by recreational goods and vehicles as well as motor vehicles and parts). Detailed information on monthly PCE spending can be found on Table 2.3.5U.”
There is further explanation (https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf https://www.bea.gov/sites/default/files/2021-01/pi1220.pdf https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Chart IB-14, US, Personal Savings as a Percentage of Disposable Personal Income, Quarterly, 1980-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-14A provides the US personal savings rate, or personal savings as percent of disposable personal income, on an annual basis from 1929 to 2020. The US savings rate shows decline from around 10 percent in the 1960s to around 8 percent currently. There is sharp increase in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), in the lockdown of economic activity in the COVID-19 event.
Chart IB-14A, US, Personal Savings as a Percentage of Disposable Personal Income, Annual, 1929-2020
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Table IB-7 provides personal savings as percent of disposable income and annual change of real disposable personal income in selected years since 1930. Savings fell from 4.5 percent of disposable personal income in 1930 to minus 0.7 percent in 1933 while real disposable income contracted 6.3 percent in 1930 and 2.9 percent in 1933. Savings as percent of disposable personal income swelled during World War II to 27.9 percent in 1944 with increase of real disposable income of 3.1 percent. Savings as percent of personal disposable income fell steadily over decades from 12.0 percent in 1982 to 2.9 percent in 2005. Savings as percent of disposable personal income was 6.1 percent in 2013 while real disposable income fell 1.2 percent. The savings rate was 7.1 percent of GDP in 2014 with growth of real disposable income of 3.8 percent. The savings rate was 7.5 percent in 2015 with growth of real disposable income at 4.0 percent. The savings rate stood at 7.0 percent in 2016 with growth of real disposable income at 1.8 percent. The savings rate reached 7.3 percent in 2017 with growth of real disposable income at 2.8 percent. The savings rate stood at 7.6 percent in 2018 with growth of real disposable income at 3.4 percent. The savings rate stood at 7.6 percent in 2019 with growth of real disposable income at 2.3 percent. The savings rate jumped to 16.6 percent in 2020 with growth of real disposable income of 6.2 percent in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), in the lockdown of economic activity in the COVID-19 event.
Table IB-7, US, Personal Savings as Percent of Disposable Personal Income, Annual, Selected Years 1929-2019
| Personal Savings as Percent of Disposable Personal Income | Annual Change of Real Disposable Personal Income | |
| 1930 | 4.5 | -6.3 |
| 1933 | -0.7 | -2.9 |
| 1944 | 27.9 | 3.1 |
| 1947 | 6.3 | -4.1 |
| 1954 | 10.3 | 1.4 |
| 1958 | 11.4 | 1.0 |
| 1960 | 10.1 | 2.6 |
| 1970 | 12.8 | 4.6 |
| 1975 | 13.4 | 2.5 |
| 1982 | 12.0 | 2.2 |
| 1989 | 8.4 | 2.9 |
| 1993 | 7.9 | 1.7 |
| 2002 | 5.7 | 3.0 |
| 2003 | 5.4 | 2.6 |
| 2004 | 5.0 | 3.3 |
| 2005 | 2.9 | 1.5 |
| 2006 | 3.6 | 3.8 |
| 2007 | 3.3 | 2.4 |
| 2008 | 4.6 | 1.2 |
| 2009 | 5.9 | -0.1 |
| 2010 | 6.2 | 2.1 |
| 2011 | 6.8 | 2.1 |
| 2012 | 8.6 | 3.3 |
| 2013 | 6.1 | -1.2 |
| 2014 | 7.1 | 3.8 |
| 2015 | 7.5 | 4.0 |
| 2016 | 7.0 | 1.8 |
| 2017 | 7.3 | 2.8 |
| 2018 | 7.6 | 3.4 |
| 2019 | 7.6 | 2.3 |
| 2020 | 16.6 | 6.2 |
| Average Savings Ratio | ||
| 1980-1989 | 9.9 | |
| 2007-2019 | 6.6 | |
| Average Yearly ∆% Real Disposable Income | ||
| 1980-1989 | 3.1 | |
| 2007-2019 | 2.1 |
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
Chart IB-15 of the US Bureau of Economic Analysis provides personal savings as percent of personal disposable income, or savings ratio, from Jan 2007 to Sep 2021. The savings rate jumped to 13.1 percent in Mar 2020 and 33.8 percent in Apr 2020, decreasing to 24.8 percent in May 2020, 19.3 percent in Jun 2020, 18.7 percent in Jul 2020, 15.0 percent in Aug 2020, 14.3 percent in Sep 2020, 13.6 percent in Oct 2020, 13.0 percent in Nov 2020, 14.0 in Dec 2020, 19.9 in Jan 2021, 13.5 percent in Feb 2021, 26.6 percent in Mar 2021, 12.6 percent in Apr 2021, 10.4 percent in May 2021, 9.5 percent in Jun 2021, 10.5 percent in Jul 2021, 9.8 percent in Aug 2021, 8.1 in Sep 2021, 7.1 percent in Oct 2021 and 6.9 percent in Nov 2021 during government social transfers percent in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), in the lockdown of economic activity in the COVID-19 event. The BEA explains as follows (https://www.bea.gov/sites/default/files/2020-11/pi1020.pdf): “The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits (table 3). Within compensation, the increase reflected increases in both private and government wages and salaries. Within government social benefits, an increase in "other" benefits (notably, an increase in the Provider Relief Fund to health care nonprofits) was partly offset by a decrease in unemployment insurance. The $104.7 billion increase in current-dollar PCE in November reflected an increase of $97.4 billion in spending for services and a $7.4 billion increase in spending for goods (table 3). The increase in services was widespread, led by housing and utilities. Within goods, an increase in nondurable goods (mainly gasoline and other energy goods) was partly offset by a decrease in durable goods (led by recreational goods and vehicles as well as motor vehicles and parts). Detailed information on monthly PCE spending can be found on Table 2.3.5U. Personal outlaysincreased $106.3 billion in November (table 3). Personal saving was $1.25 trillion in November and the personal saving rate—personal saving as a percentage of disposable personal income—was 6.9 percent (table 1).” There is further explanation (https://www.bea.gov/sites/default/files/2020-12/pi1120.pdf https://www.bea.gov/sites/default/files/2021-01/pi1220.pdf https://www.bea.gov/sites/default/files/2021-02/pi0121.pdf https://www.bea.gov/sites/default/files/2021-03/pi0221.pdf https://www.bea.gov/sites/default/files/2021-04/pi0321.pdf https://www.bea.gov/sites/default/files/2021-05/pi0421.pdf https://www.bea.gov/sites/default/files/2021-06/pi0521.pdf https://www.bea.gov/sites/default/files/2021-07/pi0621.pdf https://www.bea.gov/sites/default/files/2021-08/pi0721.pdf https://www.bea.gov/sites/default/files/2021-10/pi0821.pdf https://www.bea.gov/sites/default/files/2021-10/pi0921.pdf https://www.bea.gov/sites/default/files/2021-11/pi1021.pdf https://www.bea.gov/sites/default/files/2021-12/pi1121.pdf).
Chart IB-15, US, Personal Savings as a Percentage of Disposable Income, Monthly 2007-2021
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
The uncertainties caused by the global recession resulted in sharp increase in the savings ratio that peaked at 7.3 percent in May 2008 (https://apps.bea.gov/iTable/index_nipa.cfm), as shown in Table IB-8. The second peak occurred at 7.9 percent in May 2009. There was another rising trend until 6.5 percent in Jun 2010 and then steady downward trend until 6.6 percent in Nov 2011. This was followed by an upward trend with 8.6 percent in Jun 2012 but decline to 7.6 percent in Aug 2012 followed by jump to 11.6 percent in Dec 2012. Swelling realization of income in Oct-Dec 2012 in anticipation of tax increases in Jan 2013 caused the jump of the savings rate to 11.6 percent in Dec 2012. The BEA explains as “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). There was a reverse effect in Jan 2013 with decline of the savings rate to 6.3 percent. Real disposable personal income fell 5.8 percent and real disposable per capita income fell from $41,281 in Dec 2012 to $38,886 in Jan 2013 or by 5.8 percent (http://www.bea.gov/iTable/index_nipa.cfm), which is explained by the Bureau of Economic Analysis as follows (page 3 http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf):
“Contributions for government social insurance -- a subtraction in calculating personal income --increased $6.4 billion in February, compared with an increase of $126.8 billion in January. The
January estimate reflected increases in both employer and employee contributions for government social insurance. The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base; together, these changes added $12.9 billion to January. Employer contributions were boosted $5.9 billion in January, which reflected increases in the social security taxable wage base (from $110,100 to $113,700), in the tax rates paid by employers to state unemployment insurance, and in employer contributions for the federal unemployment tax and for pension guaranty. The total contribution of special factors to the January change in contributions for government social insurance was $132.9 billion.”
Table IB-8, US, Savings Ratio and Real Disposable Income, % and ∆%
| Personal Saving as % Disposable Income | RDPI ∆% 12/07 | RDPI ∆% Month | RDPI ∆% YOY | |
| May 2008 | 7.3 | 4.4 | 4.9 | 4.9 |
| May 2009 | 7.9 | 2.4 | 1.4 | -1.9 |
| Jun 2010 | 6.5 | 3.0 | 0.1 | 2.4 |
| Nov 2011 | 6.6 | 4.9 | 0.0 | 1.3 |
| Jun 2012 | 8.6 | 8.1 | -0.1 | 3.3 |
| Aug 2012 | 7.6 | 7.0 | -0.3 | 2.0 |
| Dec 2012 | 11.6 | 12.6 | 2.4 | 6.4 |
| Jan 2013 | 5.9 | 6.1 | -5.8 | -0.4 |
| Feb 2013 | 5.6 | 5.8 | -0.3 | -1.3 |
| Mar 2013 | 5.9 | 6.1 | 0.3 | -1.4 |
| Apr 2013 | 6.2 | 6.5 | 0.3 | -1.5 |
| May 2013 | 6.4 | 7.0 | 0.5 | -1.1 |
| Jun 2013 | 6.5 | 7.0 | 0.0 | -1.0 |
| Jul 2013 | 6.3 | 6.9 | -0.1 | -0.4 |
| Aug 2013 | 6.4 | 7.2 | 0.2 | 0.1 |
| Sep 2013 | 6.5 | 7.6 | 0.4 | -0.2 |
| Oct 2013 | 6.0 | 7.3 | -0.3 | -1.1 |
| Nov 2013 | 5.8 | 7.6 | 0.3 | -2.2 |
| Dec 2013 | 6.0 | 7.8 | 0.2 | -4.3 |
| Dec 2014 | 7.7 | 13.8 | 0.7 | 5.6 |
| Dec 2015 | 7.4 | 16.7 | 0.5 | 2.5 |
| Dec 2016 | 6.5 | 18.5 | 0.2 | 1.5 |
| Dec 2017 | 6.6 | 22.2 | 0.2 | 3.1 |
| Dec 2018 | 9.0 | 27.4 | 1.2 | 4.3 |
| Dec 2019 | 7.3 | 28.5 | -0.3 | 0.8 |
| Jan 2020 | 7.8 | 29.6 | 0.9 | 1.8 |
| Feb 2020 | 8.3 | 30.4 | 0.6 | 2.2 |
| Mar 2020 | 13.1 | 28.5 | -1.5 | 0.8 |
| Apr 2020 | 33.8 | 48.6 | 15.7 | 17.0 |
| May 2020 | 24.8 | 41.4 | -4.9 | 11.3 |
| Jun 2020 | 19.3 | 39.0 | -1.7 | 9.3 |
| Jul 2020 | 18.7 | 39.8 | 0.6 | 9.8 |
| Aug 2020 | 15.0 | 34.6 | -3.7 | 5.3 |
| Sep 2020 | 14.3 | 35.4 | 0.6 | 5.6 |
| Oct 2020 | 13.6 | 34.8 | -0.5 | 5.0 |
| Nov 2020 | 13.0 | 33.0 | -1.3 | 3.2 |
| Dec 2020 | 14.0 | 33.3 | 0.2 | 3.7 |
| Jan 2021 | 19.9 | 47.1 | 10.4 | 13.4 |
| Feb 2021 | 13.5 | 34.6 | -8.5 | 3.2 |
| Mar 2021 | 26.6 | 65.5 | 23.0 | 28.8 |
| Apr 2021 | 12.6 | 39.8 | -15.5 | -6.0 |
| May 2021 | 10.4 | 35.6 | -3.0 | -4.1 |
| Jun 2021 | 9.5 | 35.1 | -0.4 | -2.8 |
| Jul 2021 | 10.5 | 36.2 | 0.8 | -2.6 |
| Aug 2021 | 9.8 | 36.0 | -0.1 | 1.0 |
| Sep 2021 | 8.1 | 33.8 | -1.6 | -1.2 |
| Oct 2021 | 7.1 | 33.4 | -0.3 | -1.0 |
| Nov 2021 | 6.9 | 33.1 | -0.2 | 0.0 |
Source: US Bureau of Economic Analysis
https://apps.bea.gov/iTable/index_nipa.cfm
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021.
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