Real Disposable Personal Income for December 2016 was released today. A quick glance at the headline number will say it was a good month as the measure rose 2.8% on an annualized basis. This measure is very noisy with last month’s change being -3.0% and the change from one year ago being +5.6%. To get away from the monthly noise, I typically look at the one-year, three -year, and five-year annualized rate of change. I am going to change those figures to start looking at the one-year, four-year, and eight-year annualized rates of change.
- One-year rate of change: +2.1%
- Four-year rate of change: +1.2%
- Eight-year rate of change: +1.9%
None of these periods show good numbers. President Trump has mentioned reducing taxes, reducing regulations, and creating jobs. All three should have significant impacts on personal income.