This visualisation shows metrics such as personal income, disposable personal income, and real disposable personal income play a crucial role in understanding the health and performance of an economy and can have implications for the stock market. It is advisable to view these metrics on a YoY (Year on Year) % change, or 1st degree ROC (Rate of Change) scale.

Personal income refers to the total amount of income received by individuals from various sources such as wages, salaries, dividends, and government transfers. It provides insight into the overall earning capacity of individuals and households in an economy. When personal income rises, it generally indicates increased purchasing power and potential for higher consumer spending, which can stimulate economic growth. Higher consumer spending can positively impact corporate profits and stock market performance.

Disposable personal income (DPI) takes personal income a step further by subtracting taxes from the total. It represents the income available to individuals for spending or saving after accounting for tax obligations. Changes in disposable personal income can influence consumer behaviour and investment decisions. When DPI increases, individuals have more financial resources at their disposal, which can contribute to higher levels of consumption and investment. This can have a positive effect on the economy and potentially boost stock market performance.

Real disposable personal income considers the effects of inflation on disposable income. It adjusts disposable income for changes in price levels, providing a measure of income that reflects purchasing power. Real DPI helps to understand the true changes in individuals' ability to buy goods and services over time. When real disposable income rises, it indicates an increase in purchasing power and the potential for increased consumer spending. This can have positive effects on the economy, as well as on corporate earnings and stock market performance.

Key Takeaways

Investors can monitor these macroeconomic metrics to assess the economy's overall health and make informed decisions. Changes in personal income, disposable personal income, and real disposable personal income can provide valuable insights into consumer behaviour, economic growth prospects, and potential stock market trends.