"disposable personal income", as reported by the BEA, is a total national figure for personal income after taxes, so comparing how individuals might spend that income in different parts of the country is not even considered by this report...the phrase may be poorly chosen, as might the phrase "personal income" itself, which includes not just wages and salaries, but also passive income from dividends, interest and rent, proprietor's income, and transfer payments such as social security...take all those forms of payments going to individuals, subtract out what's paid nationally in personal income taxes, and you have a national figure for "disposable personal income"
now, as far as changing costs of living is applied to that figure, in the computation of "personal consumption expenditures", also a national figure, the BEA adjusts each component item of expenditures for inflation individually, weighs those expenditures as a part of all expenditures, and thus comes up with a personal consumption expenditures price index...taking the change in that PCE price index and applying it to disposable personal income gives us a figure called "real disposable personal income", which is simply the purchasing power of that income indexed back to the value of 2009 dollars...EPer: rjs
Very interesting! Thanks for the reply!EPer: Mike (not verified)
You are correct, but the problem is more in calling this "disposable" which people probably read as "free to do with as you wish".
The term (as best I understand it) means "at your disposition".
What you are looking for is what I would refer to as "discretionary income", that is, money you are free to spend as you wish. - you don't "need" to spend it on anything.
Setting aside differences in location, consider two individuals - myself, I live in a modest home with a $749 mortgage payment, paid cash for my car, and have no consumer debt. Then consider the person who sits behind me, who has the same job, but recently bought a $50000 pickup truck on credit, has a house with a mortgage payment I estimate at $1500/month, and probably carries a typical consumer debt load of $10000 to $15000, and is currently vacationing with his wife for two weeks in the Caribbean somewhere.
We have about the same disposable income, but I have a lot more discretionary income.
So you can see, personal choices strongly affect how much discretionary income a person has.
You could (I suppose) establish a baseline living expense per community, and subtract that from disposable income to see how much discretionary income people have, and if it is growing or shrinking. However, I'm not sure it would be meaningful, since most people spend all they have, and put the rest on their credit card.
For most people the idea that they would have more discretionary income if they had mode disposable income is only true if they are managing their finances well with the income they currently have.
By the way, this is one definition of being rich:
A rich person is one who has regular discretionary income, and is accumulating it.
You can be rich on $30000/year, if you are living within your means and regularly putting money away.
Alternatively, you can be poor on $500000/year if you are leveraging your income with debt and spending more than you earn.
Just my thoughts.
JonEPer: Dr. Jon
Thanks for this article! Very interesting and raises some questions...
Apologies if I'm being nitpicky, but the phrase "disposable personal income" seems like a misnomer to me. One needs to pay rent, utilities, and food (at the very least) to live in a modern society. So it seems to me that, once we subtract taxes, we should subtract rent, utilities, and food as well, and then determine what Personal Spending is?
I understand that this probably makes the calculation extremely difficult (impossible at a national level?), given that someone from Glendora, CA pays a lot less in rent than someone from Palo Alto, CA; however I'm curious if, once we factor in costs that aren't "disposable", we find that Personal Spending hasn't gone up at all. Maybe it's gone down?
In fact, does this number account for the situation where our income goes up but our rent goes go up even more, so that we have actually LESS "disposable" money to spend each month?EPer: Mike (not verified)
My own experience is quite different.
Someone was trying to get a credit card using my identity, and the made a mess of my credit report, with credit applications, false addresses, etc.
I contacted Experian and they straightened it up 100%.
So I think it may be that there are a variety of experiences that people have.
None of this significantly affected my credit scores, which have been above 800 for quite a while.
I mention that because it is possible the credit agencies treat you differently if you have good credit than if you don't.
It isn't a great accomplishment to have good credit. If you are blessed with more income than you need to survive, and pay your bills reasonably close to on time, and can avoid financial disasters like being unemployed, or having huge medical bills, your credit should be pretty good. It is more a matter of "luck" than anything.EPer: Dr. Jon
Honestly, this is a weakly written article. No counter arguments at all, which would provide some perspective other than the article's author's. For a site that prided itself on data and conclusions from data, I see somehow see no data. Really seems more like a smear attack than a thought out story.EPer: Anti (not verified)
It's 2017 and not a lot has changed. Equifax just lost pretty much everyone's data and there isn't much that can be done about it.EPer: Mark (not verified)
I'm having a hard time justifying such "great" unemployment rates with such pathetic 2016 annual growth. But it seems everything is broken these days, including economic statistics. Thanks for this thorough overview.
I did not know he tried to deny Sandy Hook and I agree, that is astoundingly atrocious if true. But on economics, trade he is of sound mind.
you don't expect us to take this guy seriously, do you:?
2012 Sandy Hook Elementary School attack
In March, 2016, Roberts published an article claiming that many pictures associated with the Sandy Hook Elementary School shooting were "doctored." He further claimed that he was unable to determine if the shootings had actually taken place or not.
2013 Boston Marathon bombings
He thinks everything is a conspiracy, false flag, or rigged event.
Americans are exceptional, and we see through your BS, Roberts.EPer: floridasandy (not verified)
The propaganda drumbeat machine of the whatever they are political groups drowns out anything and everything off whatever message they wish to pound out.
Ha! Tune in Wed for Mike Rogers testimony and Thursday Jim Comey (though Comey is likely testifying about obstruction of justice). This will be fun. I think Mueller will roll the hole lot them up. I hope they let Trump tweet from jail.EPer: Ann Sommer (not verified)
Democrats and Clinton in particular are in complete denial as to why they lost the election. First off they haven't been building a bench at the state and local levels. The republicans have successfully done so starting at the dog catcher and school board level and working the way up. Democrats have had no such strategy, focusing entirely on national elections and ignoring the locals. In my district, the democrats didn't even bother field a warm body in 2/3rds of the local positions - republicans ran unopposed
they have also focused entirely on coastal elites and kicked their traditional rust belt labor base to the curb - many of these voters went trump or third party, but would have supported Sanders or Biden
And most importantly, Hillary was just a plain lousy candidate that failed to energize the base and turn out voters.
So assuming if there is any fire to all the Russia smoke, they did do us one big favor and show us how undemocratic and corrupt the system has become, with the DNC clearly putting their thumb on the scale for Clinton over Sanders or any other candidate not named ClintonEPer: Blueneck
Right on brother. You hit the nail on the head. The Russians have become the "Phantom" bogeyman...a mythical source of evil. Surely the Dems can not believe they could have lost the election by themselves it had to be some mystical power that captured the DNC computers. By the way, did I miss something: Are we at war with Russia for them to qualify as the phantom bogeyman?? I thought with some clever foreign policy, we might make them into allies if we found common ground. To me the shock is the CIA wiretapping of Americans and then gifting their illegal derived data to the NSA for them to pass it on to the press. What I don't hear about are the criminal investigations into this activity. Where is the Justice Department on these criminal acts?EPer: Lewis Spellman (not verified)
There is so much.
One side wants preferential tax policies that favor people with money and profits over people who earn money and produce profits. They want freedom from Government (taxes and regulations) and favors from Government (contracts, services and bailouts). They favor trade treaties that benefit global corporations at the expense of our Nation and its citizens. They decry illegal immigration but savor using self-imported slave labor.
The other side believes the answer to any problem is one more Government program. They place redistribution of existing wealth above creation of more wealth. They identify with women, blacks, LBGTs, Hispanics, Muslims, the poor…………. with the concerns average working Americans thrown in as an afterthought. They support those who have entered the Nation illegally at expense of those Americans at the bottom of the income ladder.
Neither side wants their constituents to pay taxes, both sides want their spending priorities and neither side wants responsibility for the resulting debt. Both sides lack the courage to break from the policies of Empire and perpetual war that are the driving forces behind our accelerating decline.
Take this as the tip of the iceberg.EPer: Mike (not verified)
could you elaborate on your last sentence.EPer: donald (not verified)
The worse is finding the specifics on data. The import/export prices are truly revised over and over and the raw categories is almost impossible to find. We know that crude is less of a percentage yet here is the deficit roaring back, taking a chunk out of the economy.
Do tell what connection they have and what evidence is and where is based? Have you read his other articles?and i thought only media neoconservative clown proping propaganda mouth picez and pseudo democrats where spinning bs.EPer: Tony (not verified)
A lot going on with "immigration" gets into such hype and fake news, statistical lies, it becomes impossible to separate the wheat from the chaff. But...services I believe including imported foreigners just placed in the U.S. Say a corporation outsources it's support to India, but if that company establishes itself as a U.S. division, yet has all workers on work Visas from India, I believe that counts as a service export instead of an import.
our trade in services surplus is in jeopardy there have been widespread reports that tourism to the US will be way down because of the travel ban fiasco and the stepped up aggressiveness of DHS...even a Canadian group put out an advisory against travelling to the US....for the next several months, a lot of those tourist dollars wont be there to offset our massive trade imbalance in goods...EPer: rjs