Personal income increased $133.2 billion, or 1.0 percent, and disposable personal income (DPI) increased $78.3 billion, or 0.7 percent, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $23.7 billion, or 0.2 percent. In December, personal income increased $56.6 billion, or 0.4 percent, DPI increased $48.5 billion, or 0.4 percent, and PCE increased $56.5 billion, or 0.5 percent, based on revised estimates.

Real disposable income increased 0.4 percent in January, compared with an increase of 0.1 percent in December. Real PCE decreased 0.1 percent, in contrast to an increase of 0.3 percent.

2010 2011
Sept. Oct. Nov. Dec. Jan.
(Percent change from preceding month)
Personal income, current dollars 0.0 0.5 0.3 0.4 1.0
Disposable personal income:
Current dollars -0.1 0.4 0.3 0.4 0.7
Chained (2005) dollars -0.1 0.2 0.2 0.1 0.4
Personal consumption expenditures:
Current dollars 0.3 0.7 0.3 0.5 0.2
Chained (2005) dollars 0.2 0.5 0.2 0.3 -0.1

The January change in disposable personal income (DPI) was affected by two large special factors. Reduced employee contributions for government social insurance, which reflected provisions of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, boosted personal income in January by reducing the employee social security contribution rates (employee contributions for government social insurance are a subtraction in the calculation of personal income). The January change in DPI was affected by the expiration of the Making Work Pay provisions of the American Recovery and Reinvestment Act of 2009, which boosted personal current taxes and reduced DPI (personal current taxes are a subtraction in the calculation of DPI). Excluding these two special factors, which are discussed more fully below, DPI increased $11.4 billion, or 0.1 percent, in January, following an increase of $48.5 billion, or 0.4 percent, in December.

Wages and salaries

Private wage and salary disbursements increased $14.8 billion in January, compared with an increase of $20.8 billion in December. Goods-producing industries' payrolls increased $10.0 billion, compared with an increase of $2.5 billion; manufacturing payrolls increased $7.0 billion, compared with an increase of $2.6 billion. Services-producing industries' payrolls increased $4.8 billion, compared with an increase of $18.2 billion. Government wage and salary disbursements increased $1.9 billion, compared with an increase of $1.0 billion.

Other personal income

Employer contributions for employee pension and insurance funds increased $3.4 billion in January, compared with an increase of $2.7 billion in December.

Employer contributions for government social insurance increased $8.6 billion in January, compared with an increase of $1.1 billion in December. The January increase was boosted by $7.5 billion reflecting an increase in the tax rates paid by employers to state unemployment funds. (Changes in employer contributions for government social insurance do not affect personal income, because employer contributions for government social insurance are also included in total contributions for government social insurance, which is a subtraction in the calculation of personal income.)

Proprietors' income increased $3.9 billion in January, compared with an increase of $8.2 billion in December. Farm proprietors' income increased $1.6 billion, compared with an increase of $1.5 billion. Nonfarm proprietors' income increased $2.3 billion, compared with an increase of $6.6 billion.

Rental income of persons increased $6.5 billion in January, compared with an increase of $1.9 billion in December. Personal income receipts on assets (personal interest income plus personal dividend income) increased $10.3 billion, compared with an increase of $21.1 billion.

Personal current transfer receipts decreased $11.2 billion, in contrast to an increase of $2.4 billion. The January decrease in personal current transfer receipts reflected a decrease of $8.9 billion to the Earned Income Credit based on federal budget projections.

Contributions for government social insurance -- a subtraction in calculating personal income -- decreased $94.9 billion in January, in contrast to an increase of $2.5 billion in December. The January decrease reflected decreases in personal contributions for government social insurance and increases in employer contributions. The January decrease in personal contributions for government social insurance reflected the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which temporarily decreased the social security contribution rate for employees and self-employed workers by 2.0 percentage points for 2011, or $105.4 billion at an annual rate. As noted above, employer contributions were boosted $7.5 billion in January by increases in the unemployment-insurance rate.

Personal current taxes and disposable personal income

Personal current taxes increased $55.0 billion in January, compared with an increase of $8.0 billion in December. Expiration of the Making Work Pay Credit provision of the American Recovery and Reinvestment Act of 2009 boosted federal withheld income taxes by $38.6 billion in January. Federal net nonwithheld income taxes (payments of estimated taxes plus final settlements less refunds) boosted the January change by $11.3 billion, based on the Office of Tax Analysis projections of higher final settlement and refunds for 2010. Disposable personal income (DPI) -- personal income less personal current taxes -- increased $78.3 billion, or 0.7 percent, in January, compared with an increase of $48.5 billion, or 0.4 percent in December.

Personal outlays and personal saving

Personal outlays -- PCE, personal interest payments, and personal current transfer payments -- increased $22.1 billion in January, compared with an increase of $54.4 billion in December. PCE increased $23.7 billion, compared with an increase of $56.5 billion.

Personal saving -- DPI less personal outlays -- was $677.1 billion in January, compared with $620.9 billion in December. Personal saving as a percentage of disposable personal income was 5.8 percent in January, compared with 5.4 percent in December. For a comparison of personal saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's flow of funds accounts and data on changes in net worth, go to http://www.bea.gov/national/nipaweb/Nipa-Frb.asp

Real DPI, real PCE and price index

Real DPI -- DPI adjusted to remove price changes -- increased 0.4 percent in January, compared with an increase of 0.1 percent in December.

Real PCE -- PCE adjusted to remove price changes -- decreased 0.1 percent in January, in contrast to an increase of 0.3 percent in December. Purchases of durable goods increased 0.3 percent, compared with an increase of 1.2 percent. Purchases of motor vehicles and parts accounted for most of the increase in durable goods in January and in December. Purchases of nondurable goods decreased 0.2 percent in January, in contrast to an increase of 0.1 percent in December. Purchases of services decreased 0.1 percent, in contrast to an increase of 0.2 percent.

PCE price index -- The price index for PCE increased 0.3 percent in January, the same increase as in December. The PCE price index, excluding food and energy in January, increased 0.1 percent, compared with an increase of less than 0.1 percent in December.

2010 Personal Income and Outlays

Personal income increased 3.0 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 1.7 percent in 2009. DPI increased 3.1 percent, compared with an increase of 0.7 percent. PCE increased 3.5 percent, in contrast to a decrease of 1.0 percent.

Real DPI increased 1.4 percent in 2010, compared with an increase of 0.6 percent in 2009. Real PCE increased 1.8 percent, in contrast to a decrease of 1.2 percent.