Changes in Personal Income and Outlays, Essay Example

There were many important economic changes that occurred to show advancement in personal income and outlays from the years 2010 to 2011.  Furthermore, advancements occurred each of the last three months in 2011 in areas of personal income and disposable personal income that lead many economists to believe the economy continues to improve.  Based on these trends, there are several key statistics that can be analyzed to suggest the causes for improved changes in the economy as well as assisting economists in being able to better predict the continued improvements, if any, that these statistics would suggest.  For the purposes of this paper, trends in personal income and disposable personal income will be analyzed specifically in regards to changes from 2010 to 2011 and statistical changes that occurred from September to December 2011.

The first important change occurred in overall personal income.  Economic statistics show that “personal income increased 4.7 percent in 2011 (that is, from the 2010 annual level to the 2011 annual level), compared with an increase of 3.7 percent in 2010” (, 2012).  This shows that the total amount of income that each individual obtained increased from 2010 to 2011, which can be a suggested trend leading economists to believe that the economy is improving.  These statistics, however, do not itemize personal income and could be from a variety of sources, including unemployment income and other welfare services.  Furthermore, the amount of personal income increased in each month from September to December at an average rate of 0.03% increase per month (, 2012).  This did include a decrease in overall percentage during the month of November when many individuals are purchasing Black Friday sales – an event that bolsters the greatest number of personal purchases in one day throughout the entire year.  Despite this minor decrease, December showed a marked improvement by 0.05% from the amount of personal income in November (, 2012).  This shows that the final quarter of 2011 was very strong economically in the area of personal income growth.

Another key statistic came in the area of disposable personal income, which is income that is readily available for use in the open market.  Disposable personal income increased by 3.4 percent, compared with an increase of 3.6 percent in 2010 (, 2012).  This is also paired with an increase in the amount of personal interest payments which say an overall increase of 4.7 percent, compared with an increase of 3.8 percent in 2010 (, 2012).  These two statistics are definitely positive consequences of the overall decrease in the national unemployment percentage.  More people are finding the ability to work a job and maintain permanent employment in 2011 than in 2010.  Furthermore, IRS payroll tax incentives such as the decrease in social security tax have granted more disposable income to individuals in their pay checks that allows for individuals to have greater ability to choose how to spend their money with more money at their disposal.  This is a key reason why many individuals are seeking to place greater payments on personal interest accounts such as credit cards and personal loans.

Given the trends over the months in the final quarter of 2011, it is safe to say that we will see continued improvement in the early months of 2012.  Due to tax season being underway, the amount of personal income and payments on personal interest may decrease as more funds are being spent on payment of taxes.  However, tax refund season always sees a spike in businesses and increases in sales, which means that disposable personal income should also see a large percentage increase in February, March and April 2012.  These national trends should suggest that there will be at least a maintaining increase in monthly personal income of 0.03%.  Nevertheless, these statistics on DPI and outlays show that more people are becoming smarter consumers and working to pay off debts at a much greater rate than in past years.

Bibliography (2012, January 30). U.s. department of commerce. Retrieved from