Real (inflation-adjusted) disposable income is negative for three consecutive months and flat the fourth. Spending is solid. 
Weak Income, Strong Spending
The Personal Income and Outlays report for September repeats the central theme for several months, weak income but strong spending anyway.
Personal Income
- Personal income increased $77.8 billion (0.3 percent at a monthly rate) in September.
- Disposable personal income (DPI), personal income less personal current taxes, increased $56.1 billion (0.3 percent).
- Real DPI decreased 0.1 percent in September and was lower for the third consecutive month.
Personal Consumption Expenditures (PCE)
- PCE increased $138.7 billion (0.7 percent).
- Real PCE increased 0.4 percent; goods increased 0.5 percent and services increased 0.3 percent.
PCE Price Index
- The PCE price index increased 0.4 percent.
- Core PCE, excluding food and energy, increased 0.3 percent.
Real Income and Spending Billions of Chained Dollars
The three rounds of massive fiscal stimulus is easily visible in the above chart. This fueled spending and inflation.
Real Personal Consumption Expenditures
Real PCE continues unabated despite a drop in real DPI. Consumers dip into savings to support lifestyles.
Real Disposable Personal Income Excluding Transfers
Transfers are free money handouts from the government. Transfers include Medicare, Medicaid, disability checks, and Social Security.
Excluding transfers, real income has gone nowhere. It’s up less than half a percent in the last three months combines.
The NBER, the official arbiter arbiter of recessions, uses Real DPI Excluding Transfers in its recession estimates.
Blowout 4.9 Percent Increase in GDP
Also see Blowout 4.9 Percent Increase in GDP But Real Disposable Income Declines 1.0 Percent
It would be interesting to see a more granualr version of this data, cross-referenced against location, and category of worker. What does a generalised fall in disposible income really mean? Is it a shift of income away from a larger group to a smaller group, such that for some categories of people in some localities, everything seems to be getting better, and vice versa for others in othr localities. Think about how different places like Detroit are from places like Houston, for example.
The party is over. Looking for a real sell off.
Mish, I take exception to Social Security benefits being a “free handout”.
I worked from age 15 to age 68, sometimes one full time job and two part time jobs, including paying self employment taxes with those part time jobs. In addition, my spouse worked from aged 18 to age 64, sometimes working 2-3 part-time jobs while we both raised three (now tax paying) children. Many a year we paid more than the maximum social security tax which the federal government used as an interest free loan each year. My “free handout” is nothing more than the federal government returning my FORCED retirement payments.
Several of your followers on this site refer to American citizens who receive these “free handouts” as blood sucking old people who should just go ahead and die to leave more for the government to waste.
I think you should choose your words more carefully.
Yup, paid for social security all my working life and haven’t taken it yet. Meanwhile how are those Bush and Trump tax cuts doing to GDP over the years? if they never happened, we might be alright?
“My “free handout” is nothing more than the federal government returning my FORCED retirement payments.”
No, that isn’t how it works. Your money went to earlier retirees and the money you are collecting now is taken directly from today’s workers. It is a classic pyramid scheme, nothing more.
It’s still not a “Free Handout”. Free handouts are medicaid, food stamps, welfare, disability payments, etc. I don’t trust that social security is going to be here in 10 years from now so I’m starting to collect next year when I’m 62.
You are correct, it isn’t free and it is not based on some measure of need. The original comment by StS mischaracterized the mechanism of the money flow and I corrected them, referencing the entire sentence for context.
From a self-interest perspective I think you are wise to begin withdrawing soon to maximize your benefit. Of course the down side is that if there are a lot of like-minded people rushing to get their piece then the day of reckoning will be upon us sooner.
No, It is a Ponzi.
They are mad because the Ponzi is reaching an end. Younger workers know they will get little and pay increasing ss taxes. Of course, it’s a cheap shot. btw-the same people want school loans forgiven. lol
Why would 20%+ credit card interest slow Americans’ spending.
I don’t get it. On my long communte home from work, every restaurant parking lot is full. Same thing at Home Depot and, seemingly, every other business. I always thing to myself, I’ve got a good job and even I don’t feel comfy spending money because of inflation and worries about a recession. I always wonder… “Who in the heck ARE these big spenders that are keeping the economy afloat?!”
Right? Here in LA and in CO where I visit things are BOOMing. Where the $$ coming from? Theory is WarBucks.
Stocks are falling. The economic outlook is downhill from here.
Cheap/free money is like smoking crack. Once you take the pipe away addicts will find another way, in this case they turn to increasing debt and will only reverse consumption once all options are exhausted.
“The three rounds of massive fiscal stimulus is easily visible in the above chart. This fueled spending and inflation.”
“Cancel the rent” and a hold being put on student loan repayments helped fuel spending and inflation. In IL renters were able to not pay rent for over a year without being evicted. People not paying rent had a lot of disposable income to spend. The courts are so back logged in IL eviction cases are still going through the courts. Also, the Sheriffs in Cook County won’t evict anyone in the winter even if there is a court order. IL also gave away ADDITIONAL free snap benefits.
I’m spending my kids inheritance, They would just blow it on things like food and housing /s
If I had kids I would spend their inheritance to prevent them from wasting it on our Government debt repayments.
It would be interesting to see a poll amongst readers regarding savinghabits, spendinghabits and the general sentiment for the present and the future.
Although Mishtalk readers are generally very financially literate, it would still be very interesting to see if people are indeed cutting back on spending.
And I’m very curious to observe the reality of people in the US vs the EU.
I’ve recently had to spend on several forced maintenance outlays I had been delaying for three years but could no longer put off. I wonder if that’s where some of this spending surge is coming from.
I may buy an ICE car before they go out of style.
A vast “poll” that would be. ¶ In brief: Me, at the leading edge of the Boomers now 76y10m old 4th generation central Texas small farm boy distrusting government and pols of any stripe at any level. Viet Nam 1968 101st Abn Div. ¶ Inherently a frugal minimalist with Zero Debt since 2003 retired in 2006 at age 59 with wealth now living in a small south Texas town elderly housing complex by choice. Long involved in charity support US and 3rd World. Blessed I am. ¶ “The present.” The end of the US is nigh. ¶ “The future.” The US will in due course resemble the present remnants of the UK, or worse. Global chaos soon. Scripturally, beyond explaining here. Prepare for the worst as inclined. ¶ As for the present state of the US, read the Fate of Empires (1976, Sir John Glubb), online PDF. It’s but 24 (26 total) easy read pages. Read the Summary on page 24 to cut to the quick. 🔦✝️
We’re not cutting back because we’re not spenders. We “spend” our money to the savings account so we can retire early. I did stock up on a lot of things when on sale in 2022. We rarely go out to eat. We do take annual vacations – nothing extravagent.
Like the Grasshopper and the Ant?
It’s ‘get it while you can’ for most.
‘Transfers’ is the real growth sector.
That real disposable income less transfers is what I was focused on. The “real” value of transfers gets eroded by inflation every month of the year until the payments get adjusted in January. And earning income is preferable to collecting benefits, at least to those who are paying taxes and not collecting.
“Excluding transfers, real income has gone nowhere. It’s up less than half a percent in the last three months combines. ”
Personally I wouldn’t call half a percent in 3 months going nowhere. That’s 2% on an annual basis which I think is double the long term average.
Inflation cannot crack until sugar water sales roll over. Plentiful disposable income increased sugar water revenue by 8%.