Disposable income is the amount of money in households that’s available for spending and saving. Disposable income is the personal income left after income taxes. Disposable income is one of the key economic indicators. It measures the overall state of the economy.
Disposable income impacts casinos
The US Bureau of Economic Analysis releases monthly disposable income data. Disposable income remained flat month-over-month. On a year-over-year, or YoY, basis, disposable income increased 4%.
An increase in disposable income boosts consumers’ buying power. It increases the probability that consumers will spend on leisure activities. Buying power increases with an increase in net income. However, it depends on the rate of inflation. If net income rises faster than prices, buying power will always increase. How consumers perceive their level of buying power is also an important factor. Perceptions about buying power are reflected in the CCI (Consumer Confidence Index).
Personal disposable incomes have been increasing since January 2013. This could mean that consumers have more buying power. This is positive for casino companies—like Las Vegas Sands (LVS), MGM Resorts (MGM), Wynn Resorts (WYNN), and Caesars Entertainment (CZR). This would also benefit ETFs—like the VanEck Vectors Gaming ETF (BJK). BJK invests in these casino companies.