The Impact of Microsoft on Personal/Disposable Income
- $360.9 billion, or 3.7% increase for Personal Income
- $354.4 billion, or 4.0% increase for Disposable Income
Just to give the reader some context, usually personal income and disposable income increase by about 1/10th that number of usually in 0.3-0.4% range. Or if we back out the Microsoft special dividend the numbers are,
- $62.7 billion, or 0.6 percent increase for Personal Income
- $36.9 billion, or 0.4 percent increase in Disposable Income for November
The BEA does not include a disposable income number without the Microsoft special dividend so I used November to give an idea of the general magnitude of these increases. In other words, Microsoft, with a special dividend, increased Personal Income and Disposable Income for one month by a factor of 10.
Interestingly, personal consumption expenditures increased at a much more modest (and typical rate) of 0.8%. Apparently most people did not take the money and go out and spend it.
Update: Whoops. In comments Ken points out the large nature of the Microsoft special dividend is due mainly to how the BEA annualizes the Microsoft dividend. The actual dividend was $32 billion, and of that it was estimated that $24.85 billion went to individuals. To annualize the number the BEA multiplies the $24.85 billion by 12 to get $298.2 billion which was lumped in with the December numbers. So while the numbers above are “technically correct” they are misleading in that they inflate the size of the Microsoft dividend by a factor of 12. It is a strange thing and I’m still not sure why they did it this way. The BEA also offers a quarterly number of $99.4 billion as well. So it isn’t clear why they are using these larger numbers. The annual number derived by multiplying by 12 is like assuming Microsoft has such a dividend every month, and the quarterly one is like assuming Microsoft has one every quarter.