News Release
Personal Income and Outlays, January 2009
January 2009
Personal income increased $44.8 billion, or 0.4 percent, and disposable personal income (DPI) increased $183.0 billion, or 1.7 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $56.4 billion, or 0.6 percent. In December, personal income decreased $24.0 billion, or 0.2 percent, DPI decreased $17.8 billion, or 0.2 percent, and PCE decreased $101.2 billion, or 1.0 percent, based on revised estimates. Real disposable income increased 1.5 percent in January, compared with an increase of 0.4 percent in December. Real PCE increased 0.4 percent, in contrast to a decrease of 0.5 percent. 2008 2009 Sept. Oct. Nov. Dec. Jan. (Percent change from preceding month) Personal income, current dollars 0.1 0.0 -0.4 -0.2 0.4 Disposable personal income: Current dollars 0.2 0.1 -0.3 -0.2 1.7 Chained (2000) dollars 0.1 0.5 0.8 0.4 1.5 Personal consumption expenditures: Current dollars -0.4 -1.2 -0.8 -1.0 0.6 Chained (2000) dollars -0.5 -0.8 0.3 -0.5 0.4 The January change in personal income was boosted by several special factors. Pay raises for federal civilian and military personnel boosted government wage and salary disbursements and cost- of-living adjustments to several federal transfer payment programs boosted personal current transfer receipts. The January change was reduced by annual adjustments to personal contributions for government social insurance (a subtraction in calculating personal income), by the adjustment to private wages and salaries for bonus payments, and by lump-sum social security benefit payments that had boosted December personal income. Excluding these special factors, personal income increased $24.2 billion, or 0.2 percent, in January, after decreasing $31.4 billion, or 0.3 percent, in December. These special factors are discussed more fully below. Compensation of employees Private wage and salary disbursements decreased $25.8 billion in January, compared with a decrease of $27.0 billion in December. The January change in private wages and salaries was reduced by an adjustment of $20.0 billion (at an annual rate) for smaller than usual bonus payments. This type of irregular payment was not accounted for in the primary monthly source data for wages and salaries. The adjustment to January wages was based on data from state governments and from other sources. Goods-producing industries' payrolls decreased $13.0 billion in January, compared with a decrease of $15.3 billion in December; manufacturing payrolls decreased $9.1 billion, compared with a decrease of $9.2 billion. Services-producing industries' payrolls decreased $12.8 billion, compared with a decrease of $11.7 billion. Government wage and salary disbursements increased $12.9 billion in January, compared with an increase of $1.4 billion in December. Pay raises for civilian and military personnel added $9.7 billion to government payrolls in January. Employer contributions for employee pension and insurance funds increased $7.0 billion in January, compared with an increase of $1.7 billion in December. Employer contributions for government social insurance increased $3.1 billion in January, in contrast to a decrease of $1.8 billion in December. The January increase reflected an increase in the tax rate paid by employers to state unemployment insurance funds and an increase in the social security taxable wage base (from $102,000 to $106,800); together, these changes added $4.6 billion to the January increase. (Changes in employer contributions for government social insurance do not affect personal income, because employer contributions for government social insurance are also included in total contributions for government social insurance, which is a subtraction in the calculation of personal income.) Other personal income Proprietors' income decreased $6.9 billion in January, compared with a decrease of $7.0 billion in December. Farm proprietors' income increased $0.2 billion, in contrast to a decrease of $0.5 billion. Nonfarm proprietors' income decreased $7.1 billion, compared with a decrease of $6.4 billion. Rental income of persons decreased $0.4 billion in January, in contrast to an increase of $4.0 percent in December. Personal income receipts on assets (personal interest income plus personal dividend income) decreased $6.7 billion, compared with a decrease of $29.0 billion. Personal current transfer receipts increased $66.6 billion in January, compared with an increase of $29.9 billion in December. The January change in current transfer receipts reflected 5.8-percent cost-of-living adjustments to social security benefits and to several other federal transfer payment programs; together, these changes added $41.1 billion to the January increase. The January change in current transfer receipts was reduced by lump-sum social security benefits payments, which had added $7.4 billion to December benefit payments; these benefit payments resulted from a recalculation of the earnings base underlying the benefits for recent retirees. Contributions for government social insurance -- a subtraction in calculating personal income -- increased $5.1 billion in January, in contrast to a decrease of $3.8 billion in December. The January increase reflected increases in both employer and personal contributions for government social insurance. As noted above, employer contributions were boosted $4.6 billion in January by increases in unemployment-insurance rates and in the social security taxable wage base. The January increase in personal contributions for government social insurance reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program (Medicare B) and the increase in the social security taxable wage base; together, these changes added $2.8 billion to the January increase. Personal current taxes and disposable personal income Personal current taxes decreased $138.3 billion in January, compared with a decrease of $6.2 billion in December. Federal net nonwithheld income taxes (payments of estimated taxes plus final settlements less refunds) reduced the January change by $114.0 billion, based on the Office of Tax Analysis projections of lower final settlements and higher refunds for 2009. Indexation provisions of current tax law reduced federal withheld income taxes by $4.0 billion in January. Disposable personal income (DPI) -- personal income less personal current taxes -- increased $183.0 billion, or 1.7 percent, in January, in contrast to a decrease of $17.8 billion, or 0.2 percent, in December. Personal outlays and personal saving Personal outlays -- PCE, personal interest payments, and personal current transfer payments increased $54.5 billion in January, in contrast to a decrease of $103.5 billion in December. PCE increased $56.4 billion, in contrast to a decrease of $101.2 billion. Personal saving -- DPI less personal outlays -- was $545.5 billion in January, compared with $416.8 billion in December. Personal saving as a percentage of disposable personal income was 5.0 percent in January, compared with 3.9 percent in December. For a comparison of personal saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's flow of funds accounts and data on changes in net worth, which help finance consumption, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp. Real DPI and real PCE Real DPI -- DPI adjusted to remove price changes -- increased 1.5 percent in January, compared with an increase of 0.4 percent in December. Real PCE -- PCE adjusted to remove price changes -- increased 0.4 percent in January, in contrast to a decrease of 0.5 percent in December. Purchases of durable goods increased 0.2 percent, in contrast to a decrease of 0.4 percent. Purchases of nondurable goods increased 0.7 percent, in contrast to a decrease of 1.9 percent. Purchases of services increased 0.3 percent, compared with an increase of 0.1 percent. PCE index -- the price index for PCE increased 0.2 percent in January, in contrast to a decrease of 0.5 percent in December. The PCE price index, excluding food and energy, increased 0.1 percent, in contrast to a decrease of less than 0.1 percent. 2008 Personal Income and Outlays Personal income increased 3.8 percent in 2008 (that is, from the 2007 annual level to the 2008 annual level), compared with an increase of 6.1 percent in 2007. DPI increased 4.7 percent, compared with an increase of 5.5 percent. PCE increased 3.6 percent, compared with an increase of 5.5 percent. Real DPI increased 1.3 percent in 2008, compared with an increase of 2.8 percent in 2007. Real PCE increased 0.2 percent, compared with an increase of 2.8 percent. Revisions Estimates for personal income and DPI have been revised for July through December; estimates for PCE have been revised for October through December. Changes in personal income, current- dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for November and December -- revised and as published in last month's release -- are shown below. For July through December, the revisions to wages and salaries reflected the incorporation of the most recently available BLS tabulations of third-quarter private wages and salaries from the quarterly census of employment and wages. Change from preceding month November December Previous Revised Previous Revised Previous Revised Previous Revised (Billions of dollars) (Percent) (Billions of dollars) (Percent) Personal Income: Current dollars...................... -44.0 -50.0 -0.4 -0.4 -25.3 -24.0 -0.2 -0.2 Disposable personal income: Current dollars...................... -33.9 -32.5 -0.3 -0.3 -25.1 -17.8 -0.2 -0.2 Chained (2000) dollars............... 70.7 69.2 0.8 0.8 23.7 30.9 0.3 0.4 Personal consumption expenditures: Current dollars...................... -77.8 -79.6 -0.8 -0.8 -102.4 -101.2 -1.0 -1.0 Chained (2000) dollars............... 28.5 24.4 0.3 0.3 -43.3 -41.3 -0.5 -0.5 This news release also presents revised estimates of wages and salaries, personal taxes, and contributions for government social insurance for July through September 2008 (third quarter). These estimates reflect newly available third-quarter wage and salary tabulations from the quarterly census of employment and wages from the Bureau of Labor Statistics. BEA's national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements. * * * Next release -- March 27, 2009 at 8:30 A.M. EDT for Personal Income and Outlays for February.