What It Measures
Personal income measures the total income received by individuals from:
- Wages and salaries (largest component)
- Supplements to wages (employer contributions to pensions, insurance)
- Proprietors' income (self-employment)
- Rental income
- Personal interest and dividend income
- Transfer payments (Social Security, unemployment, etc.)
Data is reported at a seasonally adjusted annual rate (SAAR).
Why It Matters
Spending Capacity: Income growth supports consumer spending, the largest GDP component.Wage Trends: The wage component shows labor market strength.Savings Rate: Reported alongside personal spending and savings rate.Real Income: Inflation-adjusted income shows actual purchasing power changes.
How to Interpret
Wages vs Transfers: Distinguish between sustainable wage growth and temporary transfer payments (like stimulus checks).Spending vs Income Growth: If spending grows faster than income, savings are being drawn down.Real Personal Income: Adjust for inflation using PCE deflator.