Understanding Real Income Trends: An Analysis Of Conflictin

Conflicting signals are received from the federal government's various analyses of real income. While the Bureau of Economic Analysis showed that real per capita personal income increased by 22% during the period 1973-1986, the Bureau of the Census showed that real mean family income rose by only 3.9% during the same period. An analysis of 6 real income measures indicates that seemingly disparate trends were caused by the differential rates of growth in the components of each measure. The measures are derived from different income aggregates, income recipients, and price deflators. A single measure may give a less than complete picture of real income trends during periods of rapid social, economic, and demographic changes. The analysis suggests that there was actually a very modest increase in real incomes for the period 1973-1986, somewhere in the vicinity of 12%. From 1982 to 1986, however, the increase was between 10% and 15%.