Real (Inflation-Adjusted) Personal Income Excluding Transfers, Pre- and post-Covid

Comparing real (inflation-adjusted) personal income excluding current transfer receipts before and after the Covid pandemic, attempting to remove the effect of the pandemic.

The Bureau of Economic Analysis, a division of the United States Department of Commerce, collects data on income and other economic activity. Each month it releases data on personal income, specifically Real Personal Income.

Personal income is the income available to persons for spending or saving. It is equal to personal income less personal current taxes. ⁽¹⁾“Personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses” Bureau of Economic Analysis. https://www.bea.gov/sites/default/files/2024-08/pi0724.pdf

Transfer receipts, also called transfer payments, include government social benefits to persons, Social Security, Medicare, Medicaid, Unemployment insurance, and Veterans’ benefits.

Real means the values have been adjusted to account for changes in prices due to inflation. This allows values to be meaningfully compared over time. ⁽²⁾“Real values are inflation-adjusted estimates — that is, estimates that exclude the effects of price changes.” Bureau of Economic Analysis. https://www.bea.gov/sites/default/files/2024-06/pi0524.pdf These values are also seasonally adjusted.

The pandemic, or rather the response to it, created a large disruption in economies. Is it possible to eliminate or reduce its effects? This is an important question, as politicians of both parties make varying claims about the economy during their administrations. There are several approaches involving the selection of time frames for comparisons, and selecting these greatly informs the outcome of analysis. ⁽³⁾See:
Competing Narratives on Real Wages, Incomes Under Biden

I created two periods of time: Pre-pandemic and post-recovery. I ended the first period when the trend of this income was its highest level before the pandemic. This was February 2020. I started the second period when the level returned, consistently, to near the pre-pandemic level, which was June 2022. Graphically, this is shown in Chart 7. (Click illustrations for larger versions.)

Point A to B is the Trump administration before the pandemic. During this period, this measure of income rose by an average of $40.6 billion per month, or 0.30%.

Point C to D is the Biden administration starting when the value consistently returned to its pre-pandemic level and continuing to the present, which is July 2024. During this period, it rose by an average of $28.0 billion per month, or 0.18%. Table 7 shows details.