The State of the Economic Nation
By Lee Russ
Tuesday, August 02, 2005 at 10:18 AM
The Bureau of Economic Analysis (BEA) today released the June, 2005 statistics on income and savings. It definitely pays to read between the lines.Personal income (the total income received by individuals before taxes and not adjusted for inflation) increased by $52.9 billion (0.5%) in June. That sounds good, because in May, personal income increased only $23.2 billion (0.2%). But personal income includes three major components: (1) wages & salaries, which is what matters most directly to working people; (2) interest & dividends, called "receipts on assets," which tends to be of more interest to people with significant savings and investments; and (3) proprietor income, which tends to be of interest to owners.
Looking more closely at the numbers is pretty informative:
(1) Wages and salaries, the largest component of personal income, increased $12.0 billion in June.
(2) Personal income receipts on assets increased $18.0 billion in June.
(3) Proprietors income increased $19.1 billion in June.
In other words, the increase in interest/dividends was 50% higher than the increase in wages & salaries. And the increase in proprietor income was 59% higher than in wages & salaries. It looks like President Bush is right, he is creating an "ownership" society, just not in the sense he means.
Savings? Personal saving was 0.0 percent of disposable personal income in June.
Wait, one more bad piece of news about the great economy. The BEA released its quarterly comparison of the last quarter of 2004 with the first quarter of 2005. National growth slowed to 0.7 percent from 3.3 percent, AND DID NOT KEEP PACE WITH THE 0.8% INFLATION RATE. [BEA release 05-28, dated 6/22/05]
There may be a reason so many people feel like they are running in place, or sliding back off the treadmill.