The Bureau of Economic Analysis (BEA) released Personal Income and Outlays data for January of 2022 today.
The spotlight on this post is on real (inflation adjusted) Personal Consumption Expenditures (PCE) and real income.
The difference between “real income” and “real disposable income” is the latter is after taxes.
Inflation adjusted, real disposable income actually declined for the 9th time in 10 months but I called it 8 of 9 because of stimulus distortions clearly visible in the next chart.
Real Income and Spending Billions of Dollars
The difference between the yellow line and the red line is taxes.
The difference between disposable income and spending is savings. But most of the saving is from high wage earners, not the bottom half of the nation mostly living paycheck-to-paycheck.
The three rounds of fiscal stimulus, one under Trump and two by Biden are clearly visible.
The stimulus radically distorts month-over-month numbers and year-over-year numbers one year later.
Table as Presented by the BEA
Chained dollars are inflation-adjusted (real) dollars.
Note that disposable personal income rose by 0.1% in January, but accounting for inflation, real income dropped by 0.5%.
Real incomes are sinking but spending has risen 5 times in 9 month with one month flat.
The Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983
PCE, the Fed’s preferred measure of inflation is rising at the fastest pace in nearly 40 years.
For discussion, please see The Fed’s Preferred Inflation Measure Reaches Fastest Pace Since 1983
CPI Up Most in 40 Years
For more on the CPI, please see CPI Jumps Most Since February 1982, Up at Least 0.5% 9 Out of Eleven Months
Alleged “Benefits of Running the Economy Hot”
Meanwhile, Charles Evans, president and chief executive officer of the Chicago Fed wants to run the economy hot.
For discussion, please see Chicago Fed President Praises the “Benefits of Running the Economy Hot”
This post originated on MishTalk.Com.
Thanks for Tuning In!
Please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
Nothing to see here.