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BUSINESS CYCLE INDICATORS: Assorted economic statistics that provide valuable information about the expansions and contractions of business cycles. These statistics are grouped into three sets--lagging, coincident, and leading. Leading economic indicators tend to move up or down a few months BEFORE business-cycle expansions and contractions. Coincident economic indicators tend to reach their peaks and troughs AT THE SAME TIME as business cycles. Lagging economic indicators tend to rise or fall a few months AFTER business-cycle expansions and contractions.

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DISPOSABLE INCOME AND PERSONAL INCOME:

Disposable income (DI) is the total income that can be used by the household sector for either consumption or saving during a given period of time, usually one year. Personal income (PI) is the total income received by the members of the domestic household sector, which may or may not be earned from productive activities during a given period of time, usually one year. Disposable income is after-tax income that is officially calculated as the difference between personal income and personal tax and nontax payments. In the numbers game, personal tax and nontax payments are about 15 percent of personal income, which makes disposable personal income about 85 percent of personal income.
The derivation of disposable income (DI) from personal income (PI) by subtracting personal taxes (PT) is illustrated in this equation:
DI=PI - PT
A reasonable question might arise: "Of what use is disposable income in the study of the macroeconomy?" After all, national income measures the total income EARNED by factors of production and personal income measures the total income RECEIVED by the household sector. What more is needed?

Disposable income provides useful information about the amount of income received by the household sector that is actually available for spending. The key is that a portion of personal income is gobbled up by income taxes. While the household sector officially receives personal income, the government sector is primed and ready to extract a portion of this personal income in income taxes.

<= DISPOSABLE INCOMEDISSAVING =>


Recommended Citation:

DISPOSABLE INCOME AND PERSONAL INCOME, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: January 21, 2019].


Check Out These Related Terms...

     | personal taxes | consumption expenditures | saving | gross domestic income | national income | net domestic product | personal tax and nontax payments | factor payments | transfer payments | income earned but not received | income received but not earned | corporate profits distribution |


Or For A Little Background...

     | disposable income | personal income | gross domestic product | gross domestic product, income | production | resource markets | National Income and Product Accounts | Bureau of Economic Analysis | National Bureau of Economic Research |


And For Further Study...

     | business cycles | circular flow | gross domestic product, expenditures | gross domestic product, ins and outs | gross domestic product, welfare | gross national product | real gross domestic product | national income and gross domestic product | national income and net domestic product | personal income and national income |


Related Websites (Will Open in New Window)...

     | Bureau of Economic Analysis |


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