Chapter Six Media Article: B.C. Out Performs Disposable Income

http://www.canada.com/vancouversun/story.html?id=e818e927-5900-4c3c-8c33-7e2c296fe972&k=20144

Summary:

British Columbia people are enjoying their biggest gains in disposable income in almost two decades, the Business Council of B.C. reported today. Consumers spent heartily on new furnishings and appliances and purchased new cars in record numbers. Personal consumption, which accounts for nearly 65 per cent of the provincial economy, climbed by an impressive 5.3 per cent last year, according to the business council's latest economic snapshot. In turn, the provincial economy expanded by 3.6 per cent after inflation, extending the strongest expansion in at least three decades. Although that's just shy of 3.7 per cent growth in 2005, B.C. ranked second only to Alberta in boosting real gross domestic product last year and easily beat the national growth rate - 2.7 per cent - for the fifth straight year. For individuals, that means higher incomes. On a per-person basis, personal disposable incomes surged 6.2 per cent in 2006. This follows back-to-back increases of roughly 4.0 per cent in 2004 and 2005. As a result, per capita after-tax income in B.C. is now 15 per cent higher than three years ago. Even after inflation, British Columbia people are enjoying the largest real increases in disposable income - 4.8 per cent last year and 10 per cent over the past three years - in almost two decades. Strong job and income growth is expected to support household consumption, while healthy business investment, an array of large infrastructure projects, and preparations for the 2010 Olympics will boost construction activity. But even with slightly slower growth, B.C. is set to continue outperforming the Canadian average by a substantial margin.


Related To The Chapter:
Disposable income is the income that remains in the household after taxation. It is the most important determinant of the level of household spending. There is clearly a positive relationship between disposable income and consumption. As disposable income increases, consumption will increase as well. This will increase job opportunity for people who are unemployed. As job opportunity increases, more people are employed so more people will have disposable income to spend. This causes a increase in Gross Nationals Product too. As a result, all these factors keeps the economy going on.

Personal Reflection:
An economy with very small amount of people spending is not good for the economy. If people don't have disposable income to spend, less people would spend their money on luxury items, so spending decreases. If that happens, it is really hard to keep the economy going. In order for people to have disposable income to spend, the following would help. If people are unemployed, more job opportunities must available for the unemployed. Also getting a promotion would increase your disposable income since your salary is raised after promotion. More spending would bring good results to the economy.