The BEA revised personal income lower in April and May. Get used to negative revisions because more are coming. 
The BEA’s Personal Income and Outlays report for June 2024 shows significant negative revisions in income for April and May but a boost in spending in May.
For June, economists missed the mark badly. The Bloomberg Econoday nominal personal income consensus estimate for June (current dollars) was 0.4 percent but the BEA reports 0.2 percent.
This rates to fuel the discrepancy between Gross Domestic Product (GDP) and Gross Domestic Income (GDI).
Personal Income and PCE
- Personal income increased $50.4 billion (0.2 percent at a monthly rate) in June.
- Disposable personal income (DPI), personal income less personal current taxes, increased $37.7 billion (0.2 percent)
- Personal consumption expenditures (PCE) increased $57.6 billion (0.3 percent).
- Real (inflation-adjusted) DPI increased 0.1 percent in June
- Peal PCE increased 0.2 percent; goods increased 0.2 percent and services increased 0.2 percent.
Spending rose more than income in May and June.
PCE Price Index Month-Over-Month
- The PCE price index, the Fed’s preferred measure of inflation, increased 0.1 percent.
- Prices for goods decreased 0.2 percent and prices for services increased 0.2 percent.
- Excluding food and energy, the PCE price index increased 0.2 percent
- Food prices increased 0.1 percent and energy prices decreased 2.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.
PCE Price Index Year-Over-Year
- From the same month one year ago, the PCE price index for June increased 2.5 percent.
- Prices for goods decreased 0.2 percent and prices for services increased 3.9 percent.
- Food prices increased 1.4 percent and energy prices increased 2.0 percent.
- Excluding food and energy, the PCE price index increased 2.6 percent from one year ago.
Five Measures of Inflation Percent Change Year-Over-Year
The market is up today (so far at least) for the 223rd time (I made that number up but it may be close), on news of expected rate cuts with moderating inflation.
However, please note zero year-over-year progress on the CPI for a full year. Year-over-year improvement on PCE has slowed to a trickle.
And the Fed will not exactly be pleased with the composition of the month-over-month contribution to the PCE price index.
Prices for goods decreased 0.2 percent and prices for services increased 0.2 percent.
Services inflation has been sticky and services are more important than goods.
Regardless of little additional progress on inflation, rate cut odds have been increasing rapidly because the economy is slipping rapidly, even jobs.
The GDP-GDI Discrepancy
Real GDP and GDI in Billions of Dollars 2024 Q2 Advance Estimate
Gross Domestic Product (GDP) and Gross Domestic Income (GDI) are two measures of the same thing. Product produced should match sales and income.
They don’t. And today we see negative revisions to income for Q2. GDI, for Q2 is not yet published.
Expect a Rate Cut in September as All Hell Breaks Loose
For discussion of the weakening economy please see “All Hell Breaks Loose” In the Next Few Months as Recession Bites
Nearly everyone has their eyes on this relatively benign inflation data, but the real news in this report is the significant negative revisions to income.
This implies the job reports are not what they seem. Later today I will discuss huge pending negative revisions for jobs, so stay tuned in.
No worries, after Netanyahu just convinced congress we need to go to war with Iran surely we will have a booming war economy. After all, 150 oil will help everyone. It is absolutely mind boggling how far gone our govt is and how paid off these people are. If things keep escalating we’re not going to need all these fancy charts and graphs for much longer.
Wait…….so if I draw a bunch of squiggly lines on a chart that seem to be going in the right direction but in reality, NOTHING has changed and the cost of everything is still through the roof……it’s time to cut rates!? ….got it! Nothing is going to change if the FED cuts. Just going to get worse. But hey, what do I know? A fetus could grasp that throwing helicopter $$money out to the American people while simultaneously shutting down the economy during “a flu” would seriously fu*k things up. …oh forgot to mention Joe Biden’s “inflation reduction act” which should be called …..make___up___name___here. …Cost of Snickers bar when I was 10 years old= $.20, cost of Snickers bar now=$2.00, I stopped buying toilet paper and am now using my ATM card for “said” deposits. God bless the USA!
There’s a pretty big discrepancy between PCE inflation of +0.1% in June versus the CPI inflation of -0.1%. Using CPI adjuster would put the Real DPI increase in June at 0.3%.
Who woulda thunk?
Please don’t tell me everybody didn’t see that bus coming, and yes, even Him…
Income down? More inflation? = Less money that is worth less every day. Good combination eh?
Biden, Harris and Trump want to end the ME war stiffening Hamas/ Fatah positions. Bibi refuses to get out of Jasa for 5 more bodies and give Sinwar and Fatah a victory and 2 states solution. NVDA (Yoknean) and Haifa, a high tech center, 20 miles south of Lebanon, might be next ==> Sending QQQ down M/M, deflating the US.
It’s hilarious how folks say market is up due to upcoming rate cuts. I think it’s up 40% since like October when they anticipated 6 rate cuts over 2024. None have happened. To say it’s rising still in anticipation of the FIRST rate cut in July is laughable. If that’s your argument, pretty sure it’s priced in.
Then you hear–pricing in a Trump win. Funny, what was it pricing in since October while Biden was leading the polls until May/June?
It’s liquidity and hopium baby!
When rates drop it means bad things are happening!
To believe in the Fed is crazy given their raging successes! Almost as bad as believing in Congress, fiscal policy and a debt ceiling that might someday be heeded.
The creation of the Federal Reserve in 1913 was, and continues to be this countries worst/biggest mistake by far! Nothing else is even close!
‘Success’ for the fed has nothing to do with how the plebes have fared. Banking interests continue to do well, not coincidentally they happen to comprise the fed.
If SPY will close Jul 23/24 gap by Fri Jul 30 it will close > Jun high, the 1M will become green. If in Aug SPY will rise to Jul 16/17 gap it might prolong the rally for several more months, or deflate M/M.
SPY 1M is already green < Jun high.
The Rent CPI (green) is fake, that’s why it’s high above. The CPI (brown) should be lower < 3%.
Personal income is expected to oscillate. That is why you live on considerably less than your income and the oscillation has no effect on your lifestyle. Invest the surplus until you don’t have to work.
Invest it till you don’t have to work? Yeah sure
works for a few but not the masses. If you think there’s a homeless problem now just wait.