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Nation's Personal Income Rises Healthy 6.8% in '84 D WASHINGTON

January 18, 1985|Associated Press

Americans' disposable personal income rose a strong 6.8% in 1984, after subtracting taxes and inflation, the government said today. The gain was almost double that of 1983 and the best in more than a decade.

The Commerce Department said the improvement in disposable income--what's left after paying taxes--resulted from a strong increase in employment during the year. In 1984, the labor force grew by 2.2 million, the largest December-to-December increase in five years.

The 6.8% gain contrasted with a 3.5% increase in 1983 and a minuscule 0.5% increase in 1982, when the country was mired in recession.

It was the strongest one-year increase since a matching 6.8% gain in 1973.

For the month of December, the department reported that personal income rose 0.5% after a 0.6% increase in November.

Personal consumption spending, which includes virtually everything except interest payments on debts, rose an even stronger 1.2% in December, following a 1% rate the month before. The two strong increases in spending followed a 0.4% decline in October.

The gain in Americans' spendable income also was helped along by a low inflation rate. Unlike the late 1970s, when income advances were substantially reduced by high inflation rates, inflation for 1984 remained low.

According to a price index tied to the income report, inflation averaged only 3.2% for 1984, down from 3.7% in 1983. This was the best performance for this index since 1967, when it registered only a 2.5% gain.

Consumer spending, after discounting the effects of inflation, rose 5.3% in 1984--the best performance since a 5.6% rise in 1976. The increased spending by consumers has been credited as one of the main driving forces behind the nation's recovery from the 1981-82 recession.

Personal savings dipped to an annual rate of $150.5 billion in December. That left the national savings rate at 5.7%, down from 6.4% in November.

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