Real Disposable Income Per Capita Jumps 1.35% in January

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

With the release of this morning's report on January's personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 1.98% month-over-month change in disposable income comes to 1.35% when we adjust for inflation. This is a steep increase from last month's .37% nominal and 0.17% real change. The year-over-year metrics are 1.98% nominal and 2.34% real.

Disposable income is the amount of personal income that remains after income taxes have been deducted. Real disposable income is the post tax and benefit income after an adjustment has been made for price changes. This economic indicator is monitored to see how consumers save, spend, and borrow.

Post-great recession, the trend was one of steady growth, but generally flattened out in late 2015 with increases in 2012 and 2013. As a result of COVID pandemic stimulus measures, major spikes can be seen in April 2020, January 2021 (a December 2020 payment), and March 2021.