Disposable personal income decreased nearly two percent in the fourth quarter of 2001; however, there was still an overall increase from the second quarter. The most recent quarter followed an increase in the third quarter which was the largest increase in real terms since the second quarter of 1975 at both the national and per capita levels. Two factors contributed to the jump in the third quarter. One was the advance refund checks sent to taxpayers beginning in July as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, which lowered net income tax payments. The other factor was an increase in transfer payments in July, which reflected one time payments to taxpayers to correct for underpayments of benefits associated with an error in the indexing for social security and supplemental security income benefits.
|Per Capita Disposable Personal Income||Q3 01||Q4 01|
|Current dollars (annual rate)||26,457||25,880|
|Percent change from previous quarter||2.55||-2.18|
|Chained 1996 dollars (annual rate)||24,157||23,580|
|Percent change from previous quarter||2.62||-2.39|
NOTES: Disposable personal income is personal income less personal tax and non-tax payments.
Chained 1996 dollars are calculated using chain-type indices, rather than constant dollars, to measure real changes in personal income. The chain-type method first calculates the real changes between adjacent years. Annual rates of real changes between adjacent years are then chained (multiplied) together to obtain the rate of real changes between nonadjacent years. Chained dollars are preferable to constant dollars because it avoids the bias of base year associated with constant dollars.
Historical data back through 1991 was revised in the most recent update. An explanation is available at this page: http://www.bea.doc.gov/bea/dn/nipaweb/note301p.htm.
SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis; National Income and Product Accounts data, Table 2.1; Mar. 28, 2002; available at: http://www.bea.doc.gov/bea/dn/nipaweb/AllTables.asp?Selected=N#S2; based on Survey of Current Business.