January Real Personal Income Up 1.0%
According to the Bureau of Economic Analysis, January real personal income was $11,552 billion real dollars (seasonally adjsuted at an annual rate). Rarely do I compare any month to the preceding month, but it is important to do so this month for real personal income (and it can be done because the data is seasonally adjusted and at an annual rate). The number for January is $447 billion less than it was in December, which was the largest dollar decline on record and the second largest percentage drop (behind January 1993) on record. The reason for the decline was the pulling forward of income (both bonuses and dividends) into December, and to some extent even November, to shield it from the tax increases that took place in 2013. We indicated this would happen last month so it is no surprise to regular readers of this blog. It will be important to keep this mind next December and January when we are doing month-over-month analysis.
Despite the timing issues due to tax law changes, real personal income grew 1.0% this January compared to January 2012. This is the slowest rate of month-over-month growth since April and is only a third of the historical average growth rate in income. The annual rate of change remain unchanged at 1.8%. The anaul rate of change had been accelerating since July 2012. Continued acceleration will be positive for the future of durable goods manufacturing. However, absent the articial spike in November and December, the level of real personal income has been essentially flat since March 2012.
Real person income is one of the earliest leading indicators for the following end markets: aerospace; construction materials; custom processors; electronics, computers and telecommunications equipment; food and beverage processing; forming and fabricating (non-auto); hardware; HVAC; inudstrial motors, hydraulics and mechanical components; machinery and equipment manufacturing; metalcutting job shops; oil, gas field and mining machinery; power generation; primary metals; and printing.
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