Home > News Release: Personal Income and Outlays, January 2009
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, MONDAY, MARCH 2, 2009
BEA 09-06


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PERSONAL INCOME AND OUTLAYS
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.

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Next release -- March 27, 2009 at 8:30 A.M. EDT for Personal Income and Outlays for February.