Personal Income

Paper Summary:

This paper examines how an increase in personal income can decrease disposable spending. It explores the effects of aggregate demand and describes that a decrease in income taxes may offset the negative impact of reduced wealth on total spending. This paper includes a graph.

From the Paper:

"Personal income is income received by individuals from all possible sources. This includes wages, and income from dividends paid on investments. The largest component of total income is wages and salaries, a figure that can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth."

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