I’ve started looking at a new economic series — real disposable personal income. Because the new Trump administration is likely to push through some significant tax policy changes, I want to start tracking this measure. I chose disposable because it is personal income less taxes. No other expenses are included.
The key point of following disposable income versus total income is to follow the combined affects of income increases and tax decreases. I really don’t care where the change comes from. I’m starting to follow this series now to establish a baseline.
Data comes from the Bureau of Economic Analysis at the end of each month. Thus, the month of September 2016 just became available two weeks ago. The one-year rate of change is 2.1% which is down from 3.3% in September 2015. The ten-year rate of change is 3.6% down from 4.1% in September 2015.
There are plenty of rumors regarding president-elect Trump’s campaign promises. Since we do not have a 2017 fiscal budget, the potential for another continuing resolution into January is possible. There is a possible path for the new administration to work with Congress to push through a reconciliation version of the 2017 budget that would include the tax promises from the campaign. This would hit the goal of getting it done within the first 100 days of the administration.
When I read that, I knew it was time to start watching this series. There could be some dramatic changes to disposable income coming in just a few short months.