Adjusted for inflation, real spending and income rose 0.1 percent. Expectations were much higher.
Let’s discuss the BEA’s Income and Outlays report for August.
Personal income increased $50.5 billion (0.2 percent at a monthly rate) in August.
Disposable personal income (DPI), personal income less personal current taxes, increased $34.2 billion (0.2 percent) and personal consumption expenditures (PCE) increased $47.2 billion (0.2 percent).
Personal Income and Outlays vs Bloomberg Expectations
- Personal Income: +0.2% vs Bloomberg Consensus +0.4%
- Personal Consumption Expenditures (PCE): +0.2% vs Bloomberg Consensus +0.3%
PCE Price Details
From the preceding month, the PCE price index for August increased 0.1 percent Prices for goods decreased 0.2 percent and prices for services increased 0.2 percent.
Food prices increased 0.1 percent and energy prices decreased 0.8 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
From the same month one year ago, the PCE price index for August increased 2.2 percent. Prices for goods decreased 0.9 percent and prices for services increased 3.7 percent. Food prices increased 1.1 percent and energy prices decreased 5.0 percent.
Excluding food and energy, the PCE price index increased 2.7 percent from one year ago.
PCE Price Index vs Estimates
- PCE Price Index: +0.1% vs Bloomberg Consensus +0.1%
- PCE Price Index Year-Over-Year: +2.2% vs Bloomberg Consensus +2.3%
Personal Income Four Ways
The above instructive chart shows the impact of inflation and handouts.
PCTR stands for Personal Current Transfer Receipts. PCTR includes items such as Medicare, Medicaid, food stamps, and Social Security. Disposable means after taxes.
- Personal Income: 24,738
- Disposable Personal Income: 21,699
- Real (inflation adjusted) DPI: 17,590
- Real DPI Minus PCTR: 13,918
I expect a slighty uptick in sales in AUG-SEPT, Schools are reopening..
This has been happening since records started, yet everybody (SO CALLED EXPERTS) use words like surprised, unexpected jump in sales in AUG-SEPT!!!
The FED’s preferred measurement of inflation @ 2.7% Y/O/Y and Powell cuts 50 basis points the week before….
Services inflation remains elevated and above the FED’s arbitrary 2.0% figure per August’s CPI unadjusted report:
Services less energy services – .4% M/O/M and 4.9% Y/O/Y
Transportation services .9% M/O/M and 7.9% Y/O/Y
Medical care services <.1%> M/O/M and 3.2% Y/O/Y
Since Powell’s cut China too doubled down and has reverted back to its earlier this year stimmie fiscal and monetary measures with the cause by the FED and the Politburo in the PRC effectively raising commodity prices across the globe except for oil. Oil remains down due to demand. The Saudis finally recognized that $100 dollar is not on the horizon and will increase supply.
Powell and the governors at the FED are hoping inflation doesn’t rear its ugly head in the goods sector due to increased commodity inflation. It won’t happen in food sector where oligopolistic firms in the processing and retail sectors hold sway so look for rising food inflation.
Powell and the governors are further hoping that the service sector unemployment goes up to reduce services wages but not soooo much to cause a recession that will be recognized by the NBER.
Good luck Jerome…
I don’t foresee anymore rate cuts due to rising inflation in October, November and December so we have continuing stagflation, rising unemployment, tightening credit standards, more bankruptcies, higher government deficits, increased treasury borrowing.
Powell gets his wish that service labor layoffs occur but wages remain “elevated”.
There will be no talk of green shoots by the MSM after the election and a new president is sworn into office.
BEA is a propaganda arm of the Department Of Commerce. They report to The Big Guy.
GDP is at 3%. Corporate non-financial pretax profits are up 12.5% yoy. First time unemployment claims are low, and moving lower. There was just a 50bps interest rate cut, likely followed by another 50bps by year end.
It’s time to bite the bullet and face facts: the addition of 10+ million illegal immigrants over a very short time frame, in addition to goverment excess fiscal spending to the tune of 7% of GDP, has distorted everything. Like it or not, we are in a growth phase, and likely will remain there at least until the first half of next year. You can continue to call recession for the next nine months, or acknowledge you have been beaten in the short term by “growth” deriving from off the books immigration.
The money train left the station and there are plenty of sad faces that didn’t board. Maybe next time…..$……$
I have been hearing the “recession is here !!!!” call for a year now. They show all the correlations and the “every time this happens we have a recession” plots but all these “XYZ rules” have no meaning when the government is borrowing 6 or 7 percent of GDP all the time. We are truely grabbing wealth from the future (sorry kids…) but as long as it is allowed to go on there will not be a recession. It is different this time. Way different.
it will probably be downgraded next month. -declines 5% after adjustment…
And I wonder how that minuscule 0.1% increase was distributed among the various income groups.
My guess would be “not evenly”.
Eggs are a bargain – a dozen eggs only cost $5 versus $8 a year ago.
With all these falling prices, it’s like getting a ‘huge raise’.
Still much higher than 2019…
Right you are: $0.99 for Jumbo’s in 2019.
$1.39 in 2018.
“If you like your hyperinflation, you can keep your hyperinflation.”
Where are you buying your eggs? The current BLS average for a dozen eggs is $3.20. Egg prices are volatile because of Avian Flu, and not a good proxy for inflation.
$5.68 for Jumbo’s here at the Coast in Oregon.
.89 Euro in Lagos, Pt, just a month ago. $1.25 US.
My income did not go up 0.1 last month.
Mine did, significantly from a raise earlier in the year, reaching the social security cap a while ago, interest, dividends, options premium, capital appreciation, RSU grants, rental income, and a partridge in a pear tree.
If personal spending & income is up then so will inflation eventually.
“It’s turtles all the way down and inflation all the way up.”
Have a cookie.
Let’s tax the shit out of you
How very socialist of you. Lol.
LOL. Likely it will be true.
My income, from Investments, Trades, RE, and Fixed Income are up dramatically and for once, our TAX bill will be atrocious. I am in a high Bracket due to my losing control of my income and not spreading it out properly. I have been Ill.
Load up on municipal bonds that pay tax free income for your taxable accounts. Roth the 401k and Trad IRA, now before taxes go up…in 2026.