Average Real Household Disposable Income up $7,000

Key Points:

  • Real disposable income per household has increased $6,913 since December 2016.
  • Disposable income is the amount households have left over after income taxes.

Economist Corner:

Rising real disposable income is further evidence that the Tax Cut and Jobs Act (TCJA) has worked as intended. The economics literature suggests that lowering the corporate tax rate incentivizes firms to buy more capital. With more capital, workers are more productive and demand higher wages. This is reflected in greater disposable income, netting the average family an additional $6,913 per year.  The reduction in tax liabilities also increases disposable income.