{"id":290,"date":"2012-12-04T21:14:50","date_gmt":"2012-12-04T21:14:50","guid":{"rendered":"http:\/\/www.wallstreetandkstreet.com\/?p=290"},"modified":"2012-12-22T02:30:51","modified_gmt":"2012-12-22T02:30:51","slug":"where-we-get-our-money-personal-income-2007-vs-2012","status":"publish","type":"post","link":"https:\/\/www.wallstreetandkstreet.com\/?p=290","title":{"rendered":"Where We Get Our Money \u2013 Personal Income, 2007 vs. 2012"},"content":{"rendered":"<p>The personal income data in the GDP accounts provides good insights into structural changes in the U.S. economy.\u00a0 We compare the most recent figures (four quarters ending Q3 2012) with 2007. These are nominal data, i.e., <strong>not<\/strong> adjusted for inflation.\u00a0 Key trends:<\/p>\n<ul>\n<li><strong>Personal income is barely beating inflation<\/strong>.\u00a0 Since 2007 it rose 11.2% vs. a 10.2% rise in the CPI.\u00a0 This partly reflects Washington\u2019s war on employment, as well as fairly strong commodity prices.<\/li>\n<li>Because taxes are down slightly, <strong>Disposable<\/strong> Personal Income is a little stronger, up 13.1%.\u00a0 So disposable income is up about 3% after inflation.\u00a0 However, U.S. population rose about 4.3% over this period, so <strong>real personal disposable income <em>per capita<\/em> declined slightly<\/strong>, 2007-2012.\u00a0 We are getting poorer, but the media still does not think we pay enough taxes.<\/li>\n<li>\u00a0<strong>Spendable income is even weake<\/strong>r; \u201cwages and salaries\u201d \u2013 the compensation you can waste at the mall \u2013 grew just 7.9%, although admittedly it was supplemented by certain transfer payments, which are booming (see below).\u00a0 The other component of compensation, \u201csupplements to wages and salaries\u201d (i.e., corporate benefits such as pensions and health insurance) grew much faster, 16.0%.\u00a0 This is bullish for healthcare stocks, if you can find one not squeezed by government policies.\u00a0 Obamacare accelerates this rapid growth in non-spendable income by mandating a costly basic health insurance package.<\/li>\n<li><strong>Government is growing twice as fast as the private sector<\/strong>.\u00a0 Private wages and salaries grew 5.3%, vs. 10.1% for government wages and salaries.\u00a0 Don\u2019t believe those who complain the only reason employment is weak is that conservatives are starving government; private employment collapsed early in the recession while government employment was still growing. \u00a0(See my June 29 post.)<\/li>\n<li><strong>Farm income is booming<\/strong>, up 44.6% vs. just 7.6% for nonfarm. \u00a0Bullish for ag stocks like Deere, whose earnings have held up quite well; its little-noticed construction equipment business (17% of revenue) is benefiting from an upturn in building activity.\u00a0 Buffett recently bought the name.\u00a0 I own a little.<\/li>\n<li><strong>Government transfer payments are <\/strong>through the roof, up 37%.\u00a0 The terrible troika \u2013 Social Security, Medicare, Medicaid \u2013 are all up 30-37%, but unemployment insurance is up a huge 170%.<\/li>\n<\/ul>\n<p>All in all, not a pretty picture, and set to get worse as taxes rise and transfer payments are pared back.\u00a0 Next year uninsured individuals have to pay the Obamacare tax, cutting spendable income even more.\u00a0 Euro-sclerosis, here we come.\u00a0 Real personal disposable income per capita is declining, even though government transfer payments are soaring.\u00a0 Wages and salaries are much weaker than overall personal income, and the wages and salaries of workers in the private sector dramatically lag the public sector.\u00a0 Among the few \u201csweet spots\u201d in the U.S. economy are writing regulations in Washington DC and growing corn and soybeans in Iowa.<\/p>\n<p><a href=\"http:\/\/www.wallstreetandkstreet.com\/?attachment_id=306\" rel=\"attachment wp-att-306\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-306\" alt=\"personal income\" src=\"http:\/\/www.wallstreetandkstreet.com\/wp-content\/uploads\/2012\/12\/Capture-personal-income-Dec.png\" width=\"686\" height=\"657\" srcset=\"https:\/\/www.wallstreetandkstreet.com\/wp-content\/uploads\/2012\/12\/Capture-personal-income-Dec.png 686w, https:\/\/www.wallstreetandkstreet.com\/wp-content\/uploads\/2012\/12\/Capture-personal-income-Dec-300x287.png 300w\" sizes=\"auto, (max-width: 686px) 100vw, 686px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Copyright 2012 Thomas Doerflinger.\u00a0 All Rights Reserved.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The personal income data in the GDP accounts provides good insights into structural changes in the U.S. economy.\u00a0 We compare the most recent figures (four quarters ending Q3 2012) with 2007. These are nominal data, i.e., not adjusted for inflation.\u00a0 &hellip; <a href=\"https:\/\/www.wallstreetandkstreet.com\/?p=290\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-290","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=290"}],"version-history":[{"count":4,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/290\/revisions"}],"predecessor-version":[{"id":305,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/290\/revisions\/305"}],"wp:attachment":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}