Personal Income and Spending: An Overview


As we work every day, there is a hope and spirit for everyday health and wealth. What’s in our mind is how to live at the fullest with all the best things we could ever have. When we earn our salary, we have many choices on how we want to spend our money with and of course, the decision is absolutely in our hand as an individual.

In this article, I want to talk about the Personal Income and Spending report in the U.S. As we all know that consumers’ purchasing power is the key factor in the economic and business world. There are various sectors which are affected by the consumers’ spending such as imported goods sales retail, manufacturing output, business and investment, and also the employment level growth. All of these things have a positive correlation. On the other hand, a decline in personal income will cause domino effects from lowering consumers confidence, decline in retail sales until an augment in non-performing loans.

Disposable Personal Income (DPI) is a net value of personal earning/income after tax and basic spending. The income excludes cash inflow from properties selling, stocks or obligations. The data used in this report is based on non-farm payrolls. If the personal income rises, it means the national currency is getting strong.

Personal Spending is an amount of money spent by consumers to fulfill their needs. We’ve already knew the Personal Consumption Report (PCE), right?  A report that measures how people spend their money. In a further discussion, PCE report is also a key indicator of GDP that determines the business round growth within a country. People are more likely spending 95% of their income in durable goods, non-durable goods and services.

Personal Saving. People may save their money in various ways such as bank deposits, regular savings, or invest the money in currencies, stocks, or obligation markets. The personal saving rate tends to be inconsistent and unsteady, indeed. It’s because people usually rise up their living standard when their income increases but on the other hand not increase their saving portion. In other words, people tend to be more consumptive and it’s natural.

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