Per capita disposable personal income increased at a rate below one percent in real terms in the second quarter of 2002. This is a considerably slower rate than the first quarter which had the greatest percentage increase since the second quarter of 1975. There was also a sudden increase for disposable income in the third quarter of 2001. Two factors contributed to that. 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||Q1 02||Q2 02|
|Current dollars (annual rate)||26,616||26,953|
|Percent change from previous quarter||3.45||1.27|
|Chained 1996 dollars (annual rate)||24,166||24,307|
|Percent change from previous quarter||3.17||0.58|
NOTES: Disposable personal income is personal income less personal tax and nontax 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 1999 was revised in the July 2002 update. An explanation is available at: http://www.bea.gov/bea/newsrel/tech202a.htm.
SOURCE: U.S. Department of Commerce, Bureau of Economic Analysis; National Income and Product Accounts data, Table 2.1; Sept. 27, 2002; available at: http://www.bea.doc.gov/bea/dn/nipaweb/AllTables.asp?Selected=N#S2; based on Survey of Current Business.