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Real Personal Income Declines for the 8th Time in 9 Months

Real incomes are sinking but spending isn't.
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Real Income and Spending data from the BEA, chart by Mish

Real Income and Spending data from the BEA, chart by Mish

The Bureau of Economic Analysis (BEA) released Personal Income and Outlays data for January of 2022 today.

The spotlight on this post is on real (inflation adjusted) Personal Consumption Expenditures (PCE) and real income. 

The difference between "real income" and "real disposable income" is the latter is after taxes.

Inflation adjusted, real disposable income actually declined for the 9th time in 10 months but I called it 8 of 9 because of stimulus distortions clearly visible in the next chart.

Real Income and Spending Billions of Dollars 

Real Income and Spending data from the BEA, chart by Mish

Real Income and Spending data from the BEA, chart by Mish

The difference between the yellow line and the red line is taxes. 

The difference between disposable income and spending is savings. But most of the saving is from high wage earners, not the bottom half of the nation mostly living paycheck-to-paycheck.

The three rounds of fiscal stimulus, one under Trump and two by Biden are clearly visible.

The stimulus radically distorts month-over-month numbers and year-over-year numbers one year later. 

Table as Presented by the BEA

Real Income and Spending data and chart from the BEA, highlights by Mish

Real Income and Spending data and chart from the BEA, highlights by Mish

Chained dollars are inflation-adjusted (real) dollars. 

Note that disposable personal income rose by 0.1% in January, but accounting for inflation, real income dropped by 0.5%.

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This post originated on MishTalk.Com.

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