The following is the unedited transcript of the news release from the Bureau of Economic Analysis.


Personal income increased $108.1 billion, or 1.0%, and disposable personal income (DPI)increased $73.0 billion, or 0.8%, in January, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $51.9 billion, or 0.5%. In December, personal income increased $55.7 billion, or 0.5%, DPI increased $46.0 billion, or 0.5%, and PCE increased $69.4 billion, or 0.7%, based on revised estimates.

The January change in personal income was boosted by several special factors. Bonus payments and gains on the exercise of stock options boosted private wage and salary disbursements; pay raises for federal civilian and military personnel boosted government wage and salary disbursements; and cost-of-living adjustments to several federal transfer payment programs boosted current personal transfer receipts. The January change was reduced by annual adjustments to personal contributions for government social insurance and by lump-sum social security benefit payments that had boosted December personal income. Excluding these special factors, personal income increased $44.3 billion, or 0.4 percent, in January, after increasing $49.0 billion, or 0.4 percent, in December. These special factors are discussed more fully below.

Compensation of employees

Private wage and salary disbursements increased $64.2 billion in January, compared with an increase of $31.8 billion in December. The January change in private wages and salaries reflected an adjustment of $50.0 billion (at an annual rate) for unusually large bonus payments and the exercise of stock options. These types of irregular payments are not accounted for in the primary monthly source data for wages and salaries. The adjustment to January wages was based on data from state governments and from other sources. Goods-producing industries'' payrolls decreased $0.2 billion in January, in contrast to an increase of $5.5 billion in December; manufacturing payrolls decreased $2.3 billion, in contrast to an increase of $2.7 billion. Services-producing industries'' payrolls increased $64.5 billion, compared with an increase of $26.2 billion.

Government wage and salary disbursements increased $7.3 billion in January, compared with an increase of $1.7 billion in December. Pay raises for civilian and military personnel added $4.6 billion to government payrolls in January.

Employer contributions for employee pension and insurance funds increased $6.7 billion in January, compared with an increase of $4.1 billion in December. Employer contributions for government social insurance increased $7.9 billion in January, compared with an increase of $2.3 billion in December. The January increase reflected an increase in the tax rate paid by employers to state unemployment insurance funds and an increase in the social security taxable wage base (from $94,200 to $97,500); together, these changes added $3.0 billion in January. (Changes in employer contributions for government social insurance do not affect personal income, because employer contributions for government social insurance are also included in total contributions for government social insurance, which is a subtraction in the calculation of personal income.)

Other personal income

Proprietors'' income increased $1.5 billion in January, compared with an increase of $1.2 billion in December. Farm proprietors'' income increased $3.0 billion, in contrast to a decrease of $3.6 billion. Nonfarm proprietors'' income decreased $1.5 billion, in contrast to an increase of $4.8 billion.

Rental income of persons increased $2.5 billion in January, in contrast to a decrease of $1.7 billion in December. Personal income receipts on assets (personal interest income plus personal dividend income) increased $14.4 billion, compared with an increase of $3.1 billion.

Personal current transfer receipts increased $22.7 billion in January, compared with an increase of $18.2 billion in December. The January change in current transfer receipts reflected 3.3% cost-of-living adjustments to social security benefits and to several other federal transfer payment programs; together, these changes added $21.2 billion to the January increase. The January change in current transfer receipts was reduced by lump-sum social security benefits payments, which had added $6.7 billion to December benefit payments; these benefit payments resulted from a recalculation of the earnings base underlying the benefits for recent retirees.

Contributions for government social insurance -- a subtraction in calculating personal income-increased $19.1 billion in January, compared with an increase of $4.9 billion in December. The January increase reflected increases in both employer and personal contributions for government social insurance. As noted above, employer contributions were boosted $3.0 billion in January by increases in unemployment-insurance rates and in the social security taxable wage base. The January increase in personal contributions for government social insurance reflected an increase in the monthly premium paid by participants in the supplementary medical insurance program (Medicare B) and the increase in the social security taxable wage base; together, these changes added $5.3 billion to January personal contributions.

Personal current taxes and disposable personal income

Personal current taxes increased $35.1 billion in January, compared with an increase of $9.7 billion in December. Indexation provisions of current tax law reduced federal withheld income taxes by $4.0 billion in January. Federal net nonwithheld income taxes (payments of estimated taxes plus final settlements less refunds) boosted the January increase by $11.1 billion, based on federal budget projections for 2007.

Disposable personal income (DPI) -- personal income less personal current taxes – increased $73.0 billion, or 0.8 percent, in January, compared with an increase of $46.0 billion, or 0.5 percent, in December.

Personal outlays and personal saving

Personal outlays - PCE, personal interest payments, and personal current transfer payments increased $55.3 billion in January, compared with an increase of $70.4 billion in December. PCE increased $51.9 billion, compared with an increase of $69.4 billion.

Personal saving -- DPI less personal outlays -- was a negative $116.4 billion in January, compared with a negative $134.2 billion in December. Personal saving as a percentage of disposable personal income was a negative 1.2 percent in January, compared with a negative 1.4 percent in December. Negative personal saving reflects personal outlays that exceed disposable personal income. Saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods.

Real DPI and real PCE