This annual report shows that economically it would seem that faculty members have much about which to be happy. The academic year 2001-2002 was the fifth consecutive year in which the value of the average faculty salary rose, and the one in which academics saw the largest single-year jump in their real (inflation-adjusted) salaries since the mid-1980s. The increase in nominal, or actual salaries between 2000-2001 and 2001-2002 averaged 3.8%, as the rate of inflation at the consumer level for the period was 1.6%. This report suggests that this immediate good news is probably not the beginning of a rosier future for faculty members. The relatively large increase of 2001-2002 results from the unusual timing of inflation in the United States during the past 2 years. It is possible that consumer price inflation during 2002 will average as low as it did in 2001, but 2 considerations make it unlikely that faculty salaries will rise at last years rate. Institutional administrators now believe that inflation will be lower than last year, and they will probably set nominal salary increases lower than last year. In the second place, most institutional budgets for 2001-2002 were set by June 2001, before the recession really hit state and local tax revenues. Budgets are being corrected after a recession, and this will have an effect on faculty salaries. The report contains information about general trends, economic trends specific to higher education, gender and racial/ethnic trends, and regional differences. (Contains 14 tables, 6 figures, and 9 endnotes.) (SLD)