Personal Income

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses personal income.

  • Personal income, measuring the income of everyone combined, fell in January by a sizable chunk.  A decline of 3.6 percent over a single month is the largest fall in about 20 years.
  • The decline was due to a one-time factor of a massive dividend income drop in January following a massive dividend income increase in December.  Many companies decided to payout very high dividends late last year so that their stockholders would pay taxes at a lower 2012 tax rate.
  • Total wages and salary disbursement also fell, not necessarily congruent with job gains that are occurring in the economy.  It had declined 0.6 percent in the month, though is up 2.9 percent from one year ago.  The trend has been mostly positive over the past 3 years.
  • On the bright side, entrepreneurs are doing better and rent income is on a tear.  Overall proprietors’ income rose 0.5 percent in January and is up 5.6 percent from one year ago.  Note, this income is one of the most volatile components and depends heavily on broader economic trends.   Rent income continues a booming streak as rental households have risen sizably in the past 6 years.
  • Today’s data on income, if we exclude the special dividend factor, implies that the economy and income are expanding, albeit slowly.  Sequestration will dampen the growth over the short-term, but will not lead an outright recession.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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