Consumers spent much more than they made in August.
Real PCE (inflation-adjusted Personal Consumption Expenditures) was up 0.3 percent in August. Real disposable personal income was up 0.1 percent.
The NBER, the official arbiter of recessions, tracks real personal income excluding transfers. Real PI excluding PCTR was flat in August.
PCTR stands for Personal Current Transfer Receipts, income for which no current services were performed. Example include Medicare, Medicaid, food stamps, and Social security benefits.
Personal Income and Real Personal Income Percent Change from Month Ago
Personal Income Details
- Personal Income: 0.4 percent
- Real Disposable Personal Income: 0.1 percent
- Real Personal Income Excluding Transfers: 0.0 percent.
Disposable means after taxes.
Personal Income and Real Personal Income Billions
The above chart shows three huge spikes in personal income. These were free money transfers in the covid pandemic.
The Fed did not foresee this free money would cause inflation.
The dashed lines are nominal income. The solid lines adjust for inflation.
PCE Percent Change from Month Ago
PCE Percent Change Details
- Nominal PCE: 0.6 percent
- Real PCE: 0.3 percent
- Real PCE Goods: 0.7 percent
- Real PCE Services: 0.2 percent
Services account for more spending which is why PCE goods did not have a huge impact.
Tariffs are likely having an impact on goods causing a consumer shift in that direction.
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This is INCORRECT: “Consumers spent much more than they made in August.”
The savings rate is still > 0. Consumers spent less than they made in total.
Consumer income increased less than spending, but the level of consumer income was still higher than spending.
Consumers spent much more than they made in August.
No kidding, but that’s the American way, from the people to Uncle Sam.
We’ll keep doing it until we can’t.
Hakeem, please shutdown the gov. Trump needs his negative rates.
S&P500 market capitalization is up $4.5 trillion since April. $2.5 trillion since January.
People who own stocks are rolling in paper gains, which they’re sure will only increase.
Though I don’t watch TV, so maybe I’ve missed them, but I sense that we’re not yet seeing the same level of FOMO ads that characterized the dot-com bubble era, or the level of insanity that characterized Japan’s 1980’s bubble. I’m seriously wondering whether the true final melt-up is yet to come, thinking along the same lines as the fellow who was quoted in the WSJ a few days ago predicting the S&P500 would go to 8,000 before expiring in a 1929 echo crash.
The root problem is the non-taxation of “unrealized” capital gains. It lures people into loving companies that buy-back their shares at nosebleed P/Es while paying dividends at a fraction of a percent. Though this is called, “returning gains to shareholders”, in fact it returns gains only to ex-shareholders. Anyone who needs cash from their investments to pay their living expenses can get it only by selling their shares.
This can go on only as long as inflows into retirement funds exceed outflows. As long as there are still enough people working and contributing to their 401ks to fund the share sales of retirees, the market will continue its rise.
I find it highly amusing that people who will rave about Social Security being unsustainable as the worker/retiree ratio continues to decline do not see that the same applies to the stock and real estate markets. If the workers don’t have the income to buy your assets for what you think they’re worth, your plans to live large by selling them as you age aren’t going to pan out.
we are in a bifurcated economy…too much liquidity for the top 0.5%, too little liquidity (and big tax increase—the tariffs and non-tariff commodity shocks) for the bottom 85%
Back to school shopping for the kiddos is my guess for the reason people spent more than they earned in August. School supplies and clothing come quite dear.
Except they didn’t spend more than they earned. The savings rate declined but is still positive.
The mag7 will use the shutdown to cut data centers capex. China Xmas air cargo
shipping will deflate.
Get this the republicans went through and cut all that waste. You grain and such to poor nations etc. get this. Now the government is gonna buy that grain and give to poor nations to help the farmers because they cant sell their crops and the cost of machines gas and labor are going up.
Think i found that waste.
Perhaps a clearer statement is that the Republicans pretended they were cutting waste (they failed). Then they passed a huge increase in spending (BBB) and cut taxes for corporations (the deficit is soaring). They they allowed their pedophile president to disrupt world trade with random tariffs paid by Americans and American corporations.
They lied that the tariffs were paid by other nations. When Trump threatened virtually all of the world with aggression and alienation our former allies and trading partners reacted by boycotting American goods and services. This includes our grain crops. Now the farmers have lost global market share and the government has to buy the grain and subsidizes the farmers with a large portion (over $200 billion) of the money collected from the stupid tariffs.
As a bonus insult ~ the tariffs drive up raw material costs and make our products more expensive.
Trump failed third grade mathematics and declares that drug prices will fall 1,500% and that H1-B visas will bring in hundreds of billions when the total will be $8 billion.
Trump is a malicious idiot and is dragging our nation down and back into the dark ages. His administration is responsible for the debt going up $1 trillion every 150 days and this is unsustainable. Rational people question who Trump and the Republicans work for???
Any Questions?
Did you know you can make your points in your posts without using “pedophile”, “failed third grade math”, “malicious”, “idiot”. He isn’t a pedophie, he didn’t fail 3rd grade math. You can claim he’s an idiot, sure. It’s debatable, though somehow has become massively successful which idiots rarely do.
Did your posts from 2021-2024 take the same stabs at a President that couldn’t pass a mental test per official records released surrounding his inability to recall and refused to take a cognitive test? Don’t recall reading your posts claiming as such over those 4 years.
Granted I still read them but think less of you as a result despite a number of valid debatable topics.. And as I pointed out in my last reply to your post, how much was the debt going up under Joseph R Biden? I just pulled the numbers from fiscaldata.treasury.gov which gives the last 5 years and the numbers look horrible and the virtually the same–all bad. I noticed the Democrats want to add back more spending and will hold the government as hostage to do so. So, it appears they aren’t looking to cutback spending one little bit.
Wouldn’t it just be nicer throughout this blog and comment section to read the valid debatable topics and omit the other “stuff”?
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Now onto the topic of this post–Americans are having to spend more than they make because of the unrelenting inflation. I haven’t seen a sale on anything at the grocery store in quite some time and every store, both big box and online, sells products for the same elevated prices now. There’s no escape.
He is definitely a pedophile, and you’re going to hear about it until he’s not representing my country anymore, so get used to it. You support a pedophile. Own it.
As for the math, he claims he got drug prices down 1500%. That fails 3rd grade math.
Again, he’s not. Claiming he might be is akin to claiming he might be Santa Claus or Satan, depending upon your overall impression of him in general. And because he said that does not mean he failed 3rd grade math. See, this isn’t hard. The quote you mentioned is legit something to discuss, but the labels are preposterous. Just this week I heard that he was a communist dictator (VP Harris), a fascist dictator (everyone else post Charlie Kirk), Stalinesque (HRC), Hitler (on the daily), while others said he’s a raging capitalist that is out to ensure his wealthy buddies get money (Warren/Sanders), followed by pedophile (El Trumpedo). He’s a mysoginist, a rapist, loves Israel, loves the Arab leaders, is a Putin lapdog, is poking the bear by threatening Putin directly or via NATO. Which is it? All? Many contradict each other. I’m going with none of those things.
The CA governor alluded to no elections in 2028. Sure, why not. Could happen. The probabilty is not zero so go ahead and say it.
Just state wild-ass things, find all synonyms for evil throughout history and say that Trump is that or will be that. That strategy cost you 2 elections as Creamer mentions.
How about we focus on the policy for there’s enough to argue about there. Goodness there’s enough actual policy to argue about because this President is busy 24×7, in front of microphones and cameras, the most present President we’ve ever had, for good or bad.
Telling me I’ll hear you state the unsubstantiated claims and evil monikers until 2028…well that is true…but that doesn’t make the claims and monikers true. See the difference? Probably not.
I’m old enough to remember the demands of seeing his tax returns…for years…a Russian agent…we get them (first illegally then legally), nothing. I just watched 2 sham impeachments and how many hoaxes…nothing…mostly the corruption and dastardly workings of those going after him. It’s easier to cling to arguing about those things than to discuss the upcoming government shutdown in just days(!) or the escalations near Poland and the Baltics or ruminate over the now-closed border, deportations and escalation of violence against law enforcement, interdiction of drug boats, interventions in Venezuela, trade tensions with China, sanction pressures surrounding Russia/Ukraine, the hostage situation and Israel vs Gaza, ongoing undercounted inflation impacting every aspect of our lives, the tariff battle and its impact, the massive budget, the debt, locked up housing, the everything bubble, …i mean the list is LONG!
Nah, let’s just throw some names around instead. I guess I’ll await his “blanket pardons” to be issued, originated by President Joseph R Biden and the on-the-up-and-up Democrats.
Bullshit.
He’s not a pedophile! He just hangs out with the entire Epstein list and writes letters to Epstein with drawings of girls in them and has pictures of Epstein holding a big check from him for a “well used woman” that was geolocated to Mar A Lago. None of that is suspicious at all. As for Biden, who said he wasn’t a fail president? He lost a layup election to this moron, and that alone makes him even more of a moron.
Looking to inflation and spending, yeah I’d assume it is growing given that it’s impossible to manufacture anything here affordably but it’s also impossible to get things shipped in now. Why do you think that is? I wonder what you could possibly point to that might help us figure out why pharmaceuticals are now 100% more expensive. Market forces perhaps?
No, covering up for him to make you more comfortable with your bad choices would not be nicer.
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“What A Show!”