Real Disposable Income Per Capita in May
With the release of this morning's report on May Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal -4.91% month-over-month change in disposable income was at -5.00% when we adjust for inflation. This is a decrease from last month's 13.07% nominal and 13.59% real decreases last month. The year-over-year metrics are 8.28% nominal and 7.69% real.
Post-recession, the trend was one of steady growth, but generally flattened out in late 2015. Disposable income began a faster increase in 2012 and 2013.
The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013. More recently, the CARES Act stimulus caused a major spike in the indicator.
The BEA uses the average dollar value in 2012 for inflation adjustment. But the 2012 peg is arbitrary and unintuitive. For a more natural comparison, let's compare the nominal and real growth in per-capita disposable income since 2000. Do you recall what you were doing on New Year's Eve at the turn of the millennium? Nominal disposable income is up 110% since then. But the real purchasing power of those dollars is up only 48%.