The Economy Grew Steadily In 2018
The US GDP rose to $20.5 trillion in 2018, an increase of 2.9% in real terms compared to 2017 (Fig. 29), equal to the highest annual growth rate in the last decade. GDP per capita grew 2.2% and reached $61,275 per person in 2018.
Total national income is equal to all income earned by Americans and is an important measure of how economic growth is “felt” by workers and businesses. National income reached $17.5 trillion in 2018.
Adjusting for inflation, national income grew 2.3% from the previous year. The distribution of national income has changed since 1980. 62% is distributed to employees in the form of compensation, down from 67% in 1980. In addition, profits that are kept by companies and not given to workers, shareholders, or the government, have risen to 5% (from 3%) while corporate income taxes have fallen from 3% to 1% of national income. Dividends (which includes those paid out to investors as well as profits for S-corps), however, have more than doubled from 3% of the share of national income to 7% in 2018. Tax legislation passed in 2017 that went into effect at the beginning of 2018 lowered the corporate tax rate from 35% to 21%. That same year, taxes on corporate income fell by 33% while undistributed corporate profits increased 46% in real terms, while no other category changed by more than 5% (Fig. 31).