Real spending is up, real Income down from year ago.
Real Income and Real Spending
- Real Personal Income (all sources): -0.01 percent
- Real DPI (after taxes): 0.45 percent
- Real PI Excluding Transfers : -0.38 percent
- Real PCE (Personal Consumption Expenditures): 2.14 percent
Transfer payments are government checks or deposits for which no current services were performed. Social Security, Medicare, Medicaid, and food stamps are examples.
The trend on real PI excluding transfers (yellow line) is not good.
The NBER, the official monitor of recessions, watches real PI excluding transfers. It’s a less than robust -0.38 percent from a year ago.
Real Personal Consumption Expenditures
Real Personal Income and Real Disposable Personal Income
Inflation-Causing Stimulus
Three rounds of free money fiscal stimulus, two voted under Trump, and the third totally unwarranted round under Biden unleashed a lengthy bout of nasty inflation.
The Fed compounded the error by slashing interest rates to zero percent.
Mortgage rates dropped below three percent and everybody with a mortgage refinanced putting still more spending money in the pockets of everyone with a mortgage.
The Fed never admitted its role in this massive inflationary boom.
Personal Income and Real Personal Income
Personal Income and Real Personal Income Percent Change
- Personal Income: 0.37 percent
- Real Personal Income: 0.27 percent
- Real Personal Income Excluding Transfers: 0.19 percent
- Real DPI: 0.37 percent
Everything got rounded up a bit.
For the past three months, Transfer payments have has been a significant component of real personal income.
PCE Inflation on the Hot Side, Lack of Progress in Pictures
In case you missed it, please see PCE Inflation on the Hot Side, Lack of Progress in Pictures
PCE Year-Over-Year Inflation Details
- PCE: 3.7 percent, bottomed at 2.3 percent in September 2024
- PCE Goods: 3.7 percent, bottomed at -1.2 percent in September 2024
- PCE Services: 3.7 percent, bottomed at 3.4 percent in October 2025
- PCE Core: 3.3 percent, bottomed at 2.6 percent in April of 2025
Click above link for three charts and discussion.
Even forgetting direct transfer payments, a lot of the economy relies on federal payments.
I’ve described just a few of the ways North Dakota benefits. Take away the federal government, and most of the state would either have to live like something out of “The Waltons” or leave.
Real GDP 1.5% for Q2.
But Gross Domestic Product: Implicit Price Deflator (A191RI1Q225SBEA) @Q2 2026: 6.4%
Gross Domestic Product (A191RP1Q027SBEA) @Q2 2026 8%
That looks like stagflation, business stagnation accompanied by inflation.
The ratio of demand deposits to time deposits is still rising, bolstering GDP.
The bond proxy, the 24 month moving average of the 24 month rate-of-change in monetary flows, the volume and velocity of money, won’t peak until early 2028. I.e. the interest expense on the Federal Debt will keep increasing.
What? Impossible! We were told as soon as the border was sealed and illegals booted out, wages would surge, housing would become dirt cheap, and it would be all rainbows and unicorns across America.
https://www.youtube.com/watch?v=HdH7clBdKH4
Oh well, I guess the trade war with Canada will make everything better next month.
/s
No, silly, first we gotta destroy Iran again for, like, the tenth time this year (they keep coming back like Dear Leader’s VD), then win the pointless trade war with Iran, then everything will be ice cream.
Without transfer payments to the Trump family, the economy would be in big trouble.
Just a thought on the tarriff reduction on imported beef as being a subsidy for all the fast food places needing cheaper beef for their hankaburgers to make them profitable again. No one else will benefit, especially the beef ranchers who have to compete against imports. One of the members of the DOW will be helped tremendously.
“The Fed never admitted its role in this massive inflationary boom.”
Government bureaucracies don’t do accountability. No exceptions. The only people who ever get punished are whistle blowers who attempt to bring accountability.
My transfer payment goes up – can’t complain.
WInNiNg!
“The river, which runs and winds about in its bed, will not flow with double the speed when the amount of water is doubled.” Cantillion
What happens to 401K type account withdrawals? This must be getting to be a larger and larger amount given that almost all of the boomers are now retired. Is it included with income for which no current services are provided?
I also wonder how much of the inflation was caused by the tax cuts in the BBB. In theory less taxes means more spending, more demand, and inflation. Every action…
The SS and welfare remains very generous. Most recipients spend it quite freely, madly even. This supports much more of the economy and the inflation than anyone wants to admit.
oh ya I go crazy lol
Yes my COLA increase based on CPI does not even keep up with real dollar devaluation, otherwise known as inflation. It is spent freely and madly just to loose a little each year in spending power
Yep, that’s the problem! Not the people in charge who own 99% of the money in the economy. No sir, it’s the poorest people!
This isn’t the lower classes voting themselves money out of the national treasury, but rather the uppermost of the wealthy and cronies connected to this Presidency who have effectuated the biggest mafia-style bust-out ever perpetrated.
If you are not cheating, you are falling behind.
Seems those in power, are prime examples.
The taco economy continues to produce consistent and predictable results.
The TACO stock market, you mean, right?
The “fat lady is about to sing”. Investors beware!
Unfortunately, we can’t exclude those payments as they pretty much ARE the US economy now. The United States is a self-watering plant. The only penalty for this fraud is ever-increasing wealth inequality via the Cantillon effect. No biggie.