Personal income in the U.S. continues to increase, which assures consumer spending will contribute to economic growth in the upcoming months. Income from wages is rising steadily. Rent income is shooting high. Farmer income is falling in line with lower crop prices.
The total personal income from all sources rose by 3.9 percent in June from a year ago. Income from wage and salaries gained 5 percent and profits earned by entrepreneurs also rose by 5 percent. But interest income hardly changed with historical low interest rates. Meanwhile, farmers’ income fell by nearly 20 percent (though from very high levels). Politicians still need to be mindful of farmers’ moods in Iowa.
Rental income continues to rise at a good pace with a 7 percent gain. The rent income is accruing a large number of investors who bought homes in the past few years. Apartment rent increases of around 3 to 4 percent are also contributing to the overall rent income growth.
Income from unemployment checks is falling rapidly. Though there were few loud complaints about the unemployed households unable to feed the family when the eligibility extensions were ended, the rapid decline in unemployment payments combined with a general increase in private sector income are very positive indicators about the direction of the economy. Tough love may have induced people to find work faster.
As should be obvious, income helps but is not the sole factor for human happiness. Research shows that having good reliable friends to talk with is one of the best indicators to general happiness. For those financially fortunate, giving money to charities also raises happiness.
For those with absolutely no human feelings other than getting a strong itch in the palm when money is talked about, there tends to be only a short-term ephemeral happiness. Benedict Arnold after receiving a huge 20,000 pound payment for betraying America lived out his final years in poverty and in disgrace in London.
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.