ECONOMIC REPORT OF THE PRESIDENT

Index*
100
Figure 2-16
Real Income Growth Over Next Year, 1978–2015
1-Year-Ahead Percent Change
10
90
Expected Income
(left axis)
7
80
2014
4
70
1
60
Actual Future Income
(right axis)
2015
-2
50
-5
1978 1983 1988 1993 1998 2003 2008 2013
* Index is 100 when the share of the population expecting an increase in income exactly balances the
share of the population expecting a decrease in income. An index above 100 means a larger share
expects an increase in income.
Note: Shading denotes recession.
Source: University of Michigan; Bureau of Economic Analysis; CEA calculations.
Nonetheless, according to the 2013 Survey of Consumer Finances, the
fraction of families with payment-to-income ratios greater than 40 percent
declined below the level seen in 2001 (Bricker et al. 2014).
Earlier gains in household net worth (that is, assets less debts, also
referred to as household wealth) also supported consumer spending growth
in 2015, but to a lesser extent than in 2014 (Figure 2-18). Yet, declines in
equity wealth since the second quarter of 2015 have likely weighed some
on spending. The wealth-to-income ratio remained elevated in 2015, following
its marked increase during 2013. Changes in net worth have been
spread unevenly across households, though, and these disparities may have
implications for families and macroeconomic activity. For example, wealth
has become increasingly concentrated, such that the share of wealth held by
the bottom 90 percent of households fell from 33.2 percent in 1989 to 24.7
percent in 2013 (Bricker et al. 2014).
Housing Markets
The housing market recovery picked up steam in 2015, undergoing
what was by some measures the largest improvement since 2007. Singlefamily
home sales, bolstered by stronger labor market conditions and low
mortgage interest rates, increased substantially to their highest level since
2007. Real residential investment increased 9.0 percent during the four
The Year in Review and the Years Ahead | 79