A deeper dive into personal income and outlays for March shows significant signs of consumer stress to maintain standards of living.
This is a follow-up with a couple new charts to my post on Friday, Personal Spending Jumps More than Income in March
Income Minus Spending Chart Notes
- Real means after inflation. DPI means disposable Personal Income after taxes.
- Only twice in the last 10 months has growth in real income been greater than growth in real spending.
Personal Income Four Ways
Understanding Personal Income
- The difference between PI (red) and DPI (blue) is taxes, just over 3 trillion dollars annually.
- The difference between DPI (blue) and Real DPI (yellow) is inflation.
- The difference between Real DPI (yellow) and Real DPI Minus PCTR (green) is Personal Current Transfer Receipts
PCTR are government benefits that include Medicare, Medicaid, food stamps, Social Security, and disability payments.
Personal Income and Real Hourly Wages
Percentage Increases in Income and Hourly Earnings
- DPI is up 25.2 percent since pre-pandemic
- Real DPI is up 6.6 percent since pre-pandemic
- Real Average Hourly Earnings are up 0.9 percent since pre-pandemic
Income includes wages and salaries, Social Security and other government benefits, dividends, and interest.
Who’s Doing Well and Who Isn’t?
Those dependent on wages and salaries alone have not fared well since the pandemic. That also includes many on government benefits.
The asset holders (those with interest income, rental income, dividend income etc., are doing much better.
On average, things look at least OK, if not good.
But for millions of people struggling with food and rent on real hourly earnings that have gone nowhere in four years, the economy does not look OK.
The CPI Rose Sharply in March Led by Shelter and Gasoline
The CPI rose 0.4 percent in March. Rent was up another 0.4 percent with gasoline up 1.7 percent. Together, the pair was about half of the total rise.
Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in March. Rent of primary residence has gone up at least 0.4 percent for 31 consecutive months!
The “rents are falling” (or soon will) projections have been based on the price of new leases and cherry picked markets. But existing leases, much more important, keep rising.
Only 8 to 9 percent of renters move each year. It’s been a huge mistake thinking new leases and finished construction would drive rent prices.
For discussion, please see The CPI Rose Sharply in March Led by Shelter and Gasoline
If you own your home and refinanced near or below 3.0 percent, congratulations. If you are among the 36 percent who rent, you are probably not happy.
This is why I suggest People Who Rent Will Decide the 2024 Presidential Election
people are not buying more, things cost more
One third of the population is screwed (renters). Likewise, for most young people graduating and those that come after them, who might never be able to afford a home.
My rent increases by 8% this Wednesday here in Newport Beach, California, but “rents are falling and shelter CPI is a lagging indicator!!” LOL!!
Looking at leading economic indicators, it appears we are just coming out of a short mild recession. Isn’t this what should happen in these conditions?
Yes, exactly, the only angst is from those hoping for a downturn for political reasons, the election.
What the hell is driving this market to new highs!?!?!?
The U.S government is spending an extra $1 TRILLION every 100 days to keep the ponzi from crashing and bubbling “markets” higher.
$34.7T in debt now
Payments to service that exploding debt have blown past Defense Spending as the #2 budget expense. If congress and shitbags like yellen are allowed to keep spending, debt payments will soon catch and PASS Social Security (currently 20% – 23% of total budget) as the #1 budget expense.
The cocaine induced party is almost over……
We bought our house 10 years ago for 525K. Yesterday, our neighbor sold their house (identical) for 1.25M! Unbelievable!
The economy is fine for all who want to participate
Just like the federal government, spending more than is coming in isn’t a good economy
That argument is old as time. If you have assets today I would say you are doing pretty well especially interest bearing assets.
People with assets are doing better than people without assets but everyone is paying higher prices. I don’t know how anyone can believe our economy is doing good.
It’s cyclical take advantage of it. Or you can sit and lose.
Don’t see you post here much, wish you would, investment and trading is the only reason I started reading Mish, and only two other commenters talk market.
But for the fact that the economy is actually doing good, you have a point.
Low unemployment, high JOLTs, wages growing, but yes, beef prices and real estate are high.
One of the objectives of home ownership is price appreciation, so not really that big a problem.
Just eat less steak.
Well, no.
While spending more than you take in is bad, the Fed’s problem is the economy is too strong right now, despite dramatic rate hikes it’s still not slowing enough.
That’s not what the food banks tell me
In fact, it’s record levels opposite of your blind and disconnected take
The food bank? Please. The food banks have always been full. Your lack of argument is in line with your net worth.
RECORD LEVELS DUMBASS
You are either parody or a tried and true arrogant selfish prick “I got mine” boomer who got lucky by staying silent about the FED and Federal government fraudulently pumping your “asset” prices at the expense of the bottom 80% and 100% of Gen Z, Gen Alpha and all future generations……
TLDR — In a corrupt marxist regime, it makes sense to draw down cash and “invest” in personal development (education, vacation / stress reduction / mental health, etc)…
The long version:
Investing in productive assets that will be stolen by corrupt Marxist regime makes no sense. Wait for them to fail, as have EVERY OTHER CASE.
Every Marxist / socialist says the previous ones didnt’ do it right – but there is no right way to steal from the productive, and divide the loot between welfare and corruption.
This same crap happens in third world countries, and the people don’t wise up (or historically they haven’t). Corruption, over-regulation, taxes, and red tape are what holds these countries back — and lack of courage to stop it.
Smart people are investing in personal development, which right now has the highest after tax returns. Get rid of Biden pesos, get some mental health (lower stress, etc — not necessarily psychiatric help). Get yourself a pet and your true return will be higher than Tesla or Meta or any of the other pyramid schemes.
Vote for “old school” democrats. Vote for republicans. Vote libertarian if you can find one. … But if you vote for Biden and Obama and Marxism, then you deserve to suffer.
“TLDR — In a corrupt marxist regime…”
Hilarious.
I didn’t read your overnarrated barrage of garbage either.
Could you give us the cliff’s notes?…Or is it your usual spate of “Liberals’re evil, Biden sucks…blah blah blah” with no factual response to the actual topic?
Political agitators do not like it when their BS is exposed.
You are going to fail like all other marxists
Oh, ok.
Why come here if you don’t read anything?
If you can’t afford a Tesla, buy a dog?
Remember ladies and gentlemen, Getting an education is hard work and some of
You have a lot of work to do, based on these ridiculous tired comments.
An enormous percentage of Americans went to college, and paid dearly for it.
First they were price gouged by corrupt “professors” who lacked the practical skills to leave campus.
After graduation, most realized (as did their employers) that the “skills” taught in US universities and the skills needed to succeed in life have very little in common.
You sound a lot like a pompous college professor, based on your comments. Don’t misunderstand that — saying you sound like a Peter Pan, don’t want to grow up, college professor is not a compliment. its a put down
Do people who rent believe that the Red Party WILL or CAN do anything about it?
I have not seen one program, one MENTION, one SUGGESTION that Trump and his Cohorts are campaigning on anything that matters other than Immigration, which is EASY to solve.
Otherwise, what do they have for us in terms of improving our mess?
“Otherwise, what do they have for us in terms of improving our mess?”
More tax cuts for wealthy campaign donors to create jobs in China, only to later blame the results on “Neocons”…who aren’t really Republicans, really, they’ve been removed and it’s not Republicans fault now….
What is the total amount raised from such tax cuts?
Not to say I agree nor disagree with Trump on this, but here is his platform. I am Yes, No & Change so I will await the latter version with more teeth and realistic attempts based on where Our Country is at then.
1. Climate Change: Trump opposes most climate change legislation, a position that hasn’t changed since his term in the White House.
2. Crime and Police: Trump supports increased powers for police against crime.
3. Education: Trump has proposed a program designed to give parents more control over local schools, including the right to elect and fire school principals. Trump is also very big on school choice.
4. Economy: Trump passed a $1.5 trillion tax overhaul in 2017, which would expire during the next president’s term in 2025. Trump will work hard to continue this tax break, if the damage isn’t too bad from the last 4 years.
5. Foreign Policy: Trump is promoting an “America First” agenda
6. Health Care: Trump is big on helping people, that simply can’t take care of themselves, for various reasons. In 2017 for ex. He declared the opioid crisis a public health emergency.
7. Immigration: Trump admires, respects, supports and assist All Immigrants. They must play by the “Rule of Law” and come into the Country the Legal way. He always has and always will.
8. Reproductive Rights: Trump is more moderate on abortion. Trump doesn’t support restrictive Bans. Trump doesn’t support 6-week Bans. Trump wishes to work with the Democrats on this complex issue at hand. Trump support does include exception for rape, incest and severe medical emergencies.
Thanks for this. Did not know that Trump had a platform. Thought he was just going to carry out the instructions of his overlords.
You mean Trump is controlled by Obama and Soros too?!
When someone holds a different opinion than you and persists in believing it even though presented with you logical arguments, one can only conclude that they are controlled by evil people who are themselves controlled by the Lizard People. There is no other explication.
No, not them. (Not the Lizard people, either).
“Trump is big on helping people, that simply can’t take care of themselves, for various reasons. ”
Oh yes, Trump is renown for his kindness and charity work, from coming to the aid of helpless horny porn stars & playmates, to creating charitable trusts that evil Democrats and the “Deep state” shut down while accusing poor Trump of using those funds for personal expenses.
FYI, a self portrait in your home office, or golf clubs for yourself are the most kind & charitable thing you can ever buy for the needy, they can come visit and behold the miracle of your image while watching you putt, this truly saves them.
Yup.
.
That’s a lot of thrashing at your keyboard for one morning.
It’s night here, morning in Russia….you forgot the time difference.
Please his platform changes with the wind. He’s a criminal.
Bidenomics is nothing more than Reaganomics from the 80s, the rich get richer and the poor hard working people struggle to make ends meet. Bidumb has constantly said about making the rich pay their fair share of taxes but it’s the other way around with workers paying more for taxes now. Sad when years ago I would have an extra $5 taken out towards taxes and got back over $1400 and now having $15 I get back less than $800
Please if you can’t manage your taxes then you deserve to be broke. This is a capitalist country! if you want hand outs goto to Russia.
Getting rid of illegals will be a large decrease in government spending (no free housing, no free food, no free health care, no taking jobs away from others that are here legally). See Mish previous posts about the employment gains are government jobs related to taking care of the migrants/illegals.
Trump and Republicans are also not promising to ILLEGALLY eliminate student loans.
Trump and Republicans are not promising to increase capital gains tax to 44.6% (See Bidens next year budget).
I don’t believe any politician is going to be able to control costs but Bidenomics and the Democrats are contributing to inflation and making it worse for everyone except the people that are getting FREE stuff paid for with our tax dollars.
You sure are dumb. Get rid of illegal immigration and watch the economy tank.
They don’t take they create jobs. A lot of jobs. Always focusing the retched illegals and not the big picture. No wonder your net worth stinks
Mish! Is this chart for real?
zerohedge on X: “$1.7 trillion in interest spending next April. This is the Minsky Moment https://t.co/S3ChHjFbyg” / X (twitter.com)
If so, what are the ramifications of this? Obviously it’s bad, but how will this affect the typical middle class and working class American in the short term next summer if we’re having to pay $1.7 trillion in interest?
A projection but looks right depending on interest rate assumptions
This is getting very exciting. Will the current regime manage to lie about the economy until November? Can they successfully hide the debilitated President from the public? Can they cancel debates with Evil Orange Man and prevent Ukraine collapse until the election? If this was a Netflix movie, I’d be on the edge of my seat.
But then I remember I’m not independently wealthy and I’m a minor actor in the narrative. Oh, crap…..
Does income growth include anything sold in.the stock market ?
High net worth investors take out loans using hedged portfolio’s as collateral.
On the record, they record puny realized cap gains along with the debt they can write off.
There’s no need to sell more than enough to make the debt payments, though higher rates make this more difficult, not impossible as long as you or your fund manager can beat Fed rates in stocks or commodities vs interest on the amount borrowed.
.
Then they invest it in Democrat party SPACs, assuming they have Nancy’s trading expertise to raise such capital from their portfolios to buy war stocks whilst voting for more debt to be spent on war with local defence companies.
“Then they invest it in Democrat party SPACs,”
I think you may have meant to say “SuperPAC’s”…?
“expertise to raise such capital from their portfolios to buy war stocks whilst voting for more debt to be spent on war with local defence companies.”
Sentence structure is slightly off here, it’s close, but the placement of “such” before Capital isn’t the way we’d say it here.
.Don’t get me wrong, it’s proper English, but we seldom use that word that way here.
Reminds me of how Foreigners pretending to be American use online dictionaries & thesauruses to toss in polysyllabic references, as if it makes their English seem more adequate.
My Email is full of offers. got a 10k limit card, 15 months 0 interest. So I’ll invest my payments, use the card AND get a bonus for doing so. By the time its over, I’ll either have another or pay it off with my investment. Thats how my QE is going, thanks to banks. Spending their money, investing mine
Doesn’t include all the snail mail offers either
All,
Would it be more reflective of “real” people if we stop using averages instead of median numbers? (and Mish knows far more than I if median numbers are readily available)
I mean, we all know if you’re at the top 10%, life is great, but it absolutely skews the average in a way the other 90% simply don’t see.
I mean, I always say if there’s 10 of us on our modest middle-class cul-de-sac and Musk is one of us, doesn’t mean we’re all now billionaires because the average says so…
Yes, yes it does.
Most of the headline data thrown about is similarly useless, unless you collect a lot of cross-referenced data as well as inspect what the numbers are generated by.
Spending exceeds growth in income (revenue). Same with the federal government as with denizens of this great country.
It’s the denizens that are the main problem for the citizens.
Regarding inflation –
In 2008, the spike in oil to $145 (With no rational changes in supply or demand) was later proven to be TBTF banks cornering futures with leaked CFTC records in 2011.
These entities are shielded from public disclosure on futures and derivatives by the CFMA of 1999.
Without going into detail, It’s not unreasonable to see where it’s possible for massive trading entities to manipulate futures prices while positioning in regular equities that are affected by those futures prices, at the same time exercising control over Fed policy via “inflation”.
Both the CFMA and repeal of Glass Steagall in 1999 were massive mistakes, coupled with mathematically insane “trickle down” Reaganomics and exploding public/private debts, the next 2008 crisis will be massive.
And…it will be manufactured to the benefit of the Donor class.
You’re assuming they are all competent, and not just a bunch of Hunter Bidens.
I fell over laughing when the source of Jordan & Comer’s Biden impeachment was revealed to be a Russian intel agent, he’s sitting in jail now.
Youtube’s flooded with video’s of Dem’s making a mockery of the fact that they wasted so much political ammo on a complete dead end.
Putin’s efforts have gotten completely obvious…like, any time a Russia/Ukraine topic comes up, or a Trump topic, new names suddenly pop into the comments section.
Names that you don’t see in other topics, individuals who become defensive when you badmouth Putin.
.
.
I analyzed the UPS contracts (the one where they got a “huge” raise) and it turns out they are actually making less under their new contract when adjusted by the BLS official inflation figures.
The media, general public, and even the UPS workers themselves were deluded into thinking they were getting raises that made up for inflation.
The problem is compounded by the fact that the official inflation figures don’t match up with reality. The BLS says inflation has been 23% over the last 5 years when the reality is it’s been higher than that.
“I analyzed the UPS contracts (the one where they got a “huge” raise) and it turns out they are actually making less under their new contract when adjusted by the BLS official inflation figures.”
Mindful of the limited space for text here, can you provide the basics for that conclusion?
.
Examining the wage scales in the prior contract: https://teamster.org/wp-content/uploads/2018/12/ups18nationalmaster.pdf and comparing them to the new one.
UPS drivers get flat raises, not percent raises. They lost big time due to the high inflation of the last 5 years. Their last contract was based on the assumption of 2-3% inflation.
Their COLA is a COLA in name only. No COLAS in 2018, 2019, or 2020. It was .33/hr in 2021 and .82/hr in 2022.
No COLA in 2023 as it was a contract year. Their COLA in 2024 might be around 10 cents per hour since YoY CPI is running about 3.5%.
“For every two tenths (0.2) point increase in the Index, over and
above the base (prior year’s) Index plus three percent (3.00%) there
will be a one (1) cent increase in the hourly wage rates payable on
August 1, 2024 and every August 1 thereafter. These increases shall
only be payable if they equal five cents ($.05) in a year.”
“UPS drivers get flat raises, not percent raises. They lost big time due to the high inflation of the last 5 years. Their last contract was based on the assumption of 2-3% inflation.”
Thank you.
There’s also the variable of assumed de/disinflation, economists assume inflation will return to ~2%, however, one theory by Russell Napier has us remaining higher than that ( ~3%) for a prolonged period due to the treasury pushing short term over long term dept.
If Napier’s correct, then “higher for longer” will be true of both rates and inflation…..which means commodities, softs and energy is the place to invest….. I’m not saying this s fact, just his theory, and he’s been right for a few years now (about the strong job market, despite stocks slumping) while everyone else is scratching their heads.
The entire problem stems from both government and household debt to GDP/Income…..hence my above snark about fiscal policy of the last 45 years.
Mish, I would like to see a long term analysis of this. In numbers, not the usual comment section horseshit. In what other periods has this happened, and what were the results? How did the adjustments work, and how long did they take?
The 1920s might be an example, but I wonder especially about since WW2. Also, in the short term, what accounts for the divergence between real wages and real DPI in the past two years? Is it entirely transfer payments and dividends? Can you show it in numbers?
The short term stuff is in there. My apologies for skimming too fast. 🙁
“I would like to see a long term analysis of this. In numbers, not the usual comment section horseshit. In what other periods has this happened, and what were the results? How did the adjustments work, and how long did they take?”
You may find this an interesting read: https://themarket.ch/interview/russell-napier-the-world-will-experience-a-capex-boom-ld.7606
Excerpt –
“This is nothing new, as it was the system that prevailed from 1939 to 1979. We have just forgotten how it works, because most economists are trained in free market economics, not in history.”
The only solution is to cut taxes on billionaires and corporations as they reciprocally create jobs in China while at the same time cutting domestic spending and hiking FED rates to keep wages from growing too much so that wealth can, uh, trickle down.
It has worked magnificently for the last 45 years, right?
What’s the next marxist, anti-capitalism scheme to keep the consumer, zombie companies, and the fraudulent narrative alive for this regime?
So far, under this regime, we’ve had:
1) Unconstitutional student debt loan forgiveness
2) Waves of short-sighted stimmie checks
3) Anti-free market eviction moratoriums
4) Bank bailouts that also bailed out failed companies and depositors
5) Green technology “subsidies”
6) Many rounds of taxpayer giveaways for the MIC
7) Gargantuan “Porculus” levels of federal spending in a re-branded “Green New Deal”
8) A deluge of bogus economic data that nobody believes
9) A massive Orwellian lie to pump taxpayer funds into deadly Big Pharma
10) Too many efforts to count by government censoring and targeting anyone who highlights these facts
The usual answer when top-down control doesn’t work well … “we’ll re-double our efforts”.
That and “tax the rich” (take the modern kulaks farms/power)
PS – Our Prez was going to protect those under $400K; but with 20% Bidenflation (past 3 years cumulative), has he raised that threshold to $480K now?
“What’s the next marxist, anti-capitalism scheme to keep the consumer, zombie companies, and the fraudulent narrative alive for this regime?”
The same as the last one: Printing money. Hence transferring whatever little wealth is still produced. From those producing it. To imbeciles sitting idly on their rear owning debasement pumped up so-called “assets.”
The other 10 you mentioned, combined, do not add up to even a tenth of the size of that one. Since 1971; debasement transfers have been the only transfers of significance. With ALL the rest serving only as foils aimed at covering that up.
BNPL but just don’t pay ever
This is the Gen Z and Gen Alpha motto because of what the selfish prick boomers have done in the FED and the Federal government while the rest just smiled silently as their assets bubbled ever higher.
Squeeze those rental houses, dollar bills and ponzi stocks tight cause it won’t last much longer one way or another. In fact it would serve you better to fight for deflation and policy that serves the younger generations…….. or it might just cost you everything including breathing
The anger is boiling over
Did your parents or grandparents put their religious beliefs ahead of their economic interests by voting for Bush 43 in 2004? If so, they must have thought there would be no economic consequences for a country that started two expensive wars and cut income taxes twice. Well guess what? You and your contemporaries are the losers. You can also blame more recent Democratic administrations for playing a major role in destabilizing Ukraine. How much will it cost US taxpayers by the time the war in Ukraine is over?
Or as the philosopher would say, the once a century necessary cleansing of the ruling class is long overdue.
Credit cards to the rescue!