Income Picture: October 31, 2005

October 31, 2005

September growth in real personal income negative, sans hurricane effects

The headline from today's personal income and outlays release from the Bureau of Economic Analysis (BEA) touted healthy growth in real personal income of 0.76% in September. However, a good portion of this growth represents a "bounce back" effect from a large decrease in August income reflecting property damage inflicted by Hurricane Katrina (as rental and proprietors' income are reported net of property damage). Some (but not all) of the decline in these incomes were offset by increased insurance payments.

The chart below shows growth in real (inflation-adjusted) personal income excluding the effects of the hurricane, as well as the real growth in compensation of employees, wage and salary income, and private wage and salary income. These last three measures were unaffected by the hurricane in the latest release.

Real income measures, September 2005

Growth in real personal income, excluding the hurricane "bounce back," was -0.43% in September. Compensation of employees (-0.6%), wage and salary income (-0.6%), and private wage salary income (-0.7%) all shrank in inflation-adjusted terms.

—by L. Josh Bivens

To view archived editions of INCOME PICTURE, click here.

The Economic Policy Institute INCOME PICTURE is published upon the annual release of family income data from the Census Bureau.

EPI offers same-day analysis of income, price, employment, and other economic data released by U.S. government agencies. For more information, contact EPI at 202-775-8810.