Real personal income peaked in April of 2025. Spending continues unabated. 
Today the BEA released Personal Income and Outlays report for October and November.
- Personal income increased $30.6 billion (0.1 percent at a monthly rate) in October, followed by an increase of $80.0 billion (0.3 percent) in November
- Disposable personal income (DPI)—personal income less personal current taxes—increased $12.0 billion (0.1 percent) in October, followed by an increase of $63.7 billion (0.3 percent).
- Personal consumption expenditures (PCE) increased $98.6 billion (0.5 percent), followed by an increase of $108.7 billion (0.5 percent).
Real Income and Spending Percent Change
The lead chart shows the result of subtracting Real PCE from Real DPI. Differences, if any, are due to rounding.
The net result has been negative for seven months starting April 2025.
Personal Income and Real Personal Income
April 2025 Peak
Real DPI, Real PI Minus PCTR, and Real DPI Minus PCTR all peaked in April of 2025 (red highlights).
Spending is still surging, which explains the lead chart. Every month since April, real spending has exceeded real income.
The NBER, the official arbiter of recessions, uses Real PI minus PCTR in its recession analysis.
What Is PCTR?
PCTR stands for personal current transfer receipts, money from the government for which no current services have been performed.
Medicare, Medicaid, Social Security, Disability payments, and SNAP (food stamps) are key examples.
You may feel like you earned your SS payment and I won’t argue. But no current services (work) by you are involved.
How Long Can This Last?
The snarky, but correct answer, is until it stops.
A jump in medical care expenditures in January is highly likely to make things worse.
Minimum wages hikes did go up in January of 2026 in 19 states, but that only impacts those making the minimum wage.
Wage hikes will not come close to balancing out health care premiums. A much bigger shock, but in the other direction, will happen in April with tax refunds.
Against that, we need to factor in rising unemployment and fewer hours working.
I will do some posts on PCTR, minimum wages, and income tax tax refunds shortly.
Related Posts
January 21, 2026: Expect a Big Divergence This Year Between CPI and PCE Inflation
Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.
January 22, 2026: PCE Goods Inflation Has Bottomed, Services Poised to Explode Higher
Looking ahead, expect a huge surge in PCE inflation.
Regarding the stagflation theory, please see Might the Next Interest Rate Move by the Fed Be a Hike?
It’s time to discuss the real possibility of a renewed surge in inflation.
USA Today: “The U.S. Department of Education announced Friday, Jan. 16, that it will delay implementing involuntary collections on federal student loans, including administrative wage garnishment and the Treasury Offset Program.”
LOL! Trump’s student loan repayment plan is currently more generous than Biden’s: $0 due monthly on any student loan, and no garnishment of tax refunds or wages. Waaaayyyyy better than what the Democrats were planning. I’m surprised all Treasury bond interest rates didn’t spike at least 25 basis points higher with this announcement.
the D and R uniparty keeps on marching along in the free shit army. the only branch of the USA that has had victories since 1945. i’m a flag officer for past 40 years. i’m still amazed at how silly the blue v red team pom pom girls get all worked up in this pro wrestling game we call amerikan empire politics.
Real spending exceeds real income?
Technically correct, but only IF you subtract PCTR from personal income. But those millions of unemployed Boomers are spending the PCTR they receive ON spending at businesses.
So total income is still greater than total spending, thus the growth in real GDP. There is still a savings rate > 0. It’s lower than in April 2025 (seven months ago), but it’s still positive.
The funny thing is that those boomers are spending other people’s money, like mine. It isn’t “government” money, it’s mine. So in addition to paying FICA and taxes on my income, I have to pay for these leeches too.
When people say “I paid for it” they are wrong, they paid for someone else’s social security not their own.
Oh well, this will be the last year then I’m cutting the leeches off for good.
Yes, I joke with my relatives in the teaching and military fields that I pay their salaries as well. But at least they work for their income..
But teachers, soldiers and Boomer SS recipient all spend their income, wherever it comes from. And from a macroeconomics perspective, that total spending is still currently increasing at a good clip (even if it’s in a K-shape)
Yes, and it’s a great observation but now extrapolate what happens when that money flow slows or is cut off because there aren’t enough young people working because we have an inverted demographic pyramid. Trump makes the problem worse by kicking out all the immigrants that were paying into the system.
2030 is when all boomers hit 65+ and start collecting SS and medicare.
Too many people wanting free money handouts, not enough people paying into the system.
Where is the money going to come from? More money printing = massive inflation. Cutting the money flow off = great depression.
Choose your poison or exit point.
I think 2030 would be a good inflection point; the final Boomers retire, and then the number of retirees steadily drops , while the Millennials continue into their highest earning years?
Maybe we could muddle through, if the politicians could pull it together.
The Boomers I suspect you’re talking about are spending SS into economy, funding grandchildren’s education, daughter’s car, maybe taking the kids to Hawaii once in a while, (gulp) buying a Corvette, etc. The Secure Act (bipartisan fleece) has them madly converting Pre-Tax to Roth (fed tax revenue now!). They’re getting hit with IRMAA too. God forbid they’re single (tax code eats them up) or they become single.
The younger “providers” want something like $40/hr with a 3 hour minimum to come help GPa out of bed! That’s $86k/yr (twice daily) all taxed.
I’m not arguing with you. But aren’t you getting stable revenue?
The oldest millennials are now pushing 40s today, in 5 to 10 years they will be in their 50s which is effectively retirement age because that’s when most corporations jettison people because health care costs and insurance costs to carry them explode.
yeah, it’s illegal to do so but happens every day. You don’t notice it until you it that age then it clicks.
But the real issue is that millennials haven’t been having as many kids. Boomers probably had 4 to 6. Gen X had 2 or maybe 3. Millennials are having 1 or none (stats chart link below).
And it’s not just the “stable revenue” it’s the growing costs of health insurance, health care, property taxes, utilities, etc across the board that will squeeze and suffocate the young and old.
Multiply knee replacement, hip replacements, heart stents etc x 80 million and tell me who is going to pay for it. Do you expect 70m millennials to pay for their own health insurance and care AND pay for the boomers? How does that work mathematically?
https://www.statista.com/statistics/296974/us-population-share-by-generation/
Here’s a population generation chart. Asking 20% to 40% of a group to support the other 40% doesn’t work.
I don’t know how you fix it, it’s a total mess, I just know I don’t want to be here being taxed to death to fix it.
Your points are all very valid! I appreciate the reply.
I’ve known no Boomers with 6 kids, not even the Catholics.
Got your gens confused.
The immigrants don’t fix the problem, only delay it.
If the natives aren’t going to be having children then someone has to do it. For that past 30 years that someone has been the immigrants. Remove them and the demographic collapse accelerates.
But you’re right, the whole system isn’t sustainable and if you’re ready for it to crash now so be it. I already have an exit strategy so collapse away….
raygun with the 1986 tax act screwed the boomers with SS by lifting up age for retirement and making SS taxable. if you know how to play the tax code early in life, you will find there are more goodies than anything. really it forces you to be in certain industries with your own business if tax avoidance is the goal in life. in future they will do the same is my guess. pro tip. the tax code and SS and medicare was never meant to be fair. the 86 tax act also destroyed many investors in r/e. it was brutal for many. horrible really. i saw a great deal of formerly rich doctors and developers etc……..go belly up. my perch at wall street and park avenue law and accounting firm was a good place to see the mayhem. poor ivan lendl. great tennis player. nice humble fella. he lost millions in the 80s money. investing in manhattan brownstones…….with r/e guys.
People from 75-84 die at a rate 2.5 times greater than people 65-74.
People 85 and above die at a rate 8 times higher than those 65-74
At some point more people will die than reach age 65. I am guessing around 2031 just past the much lauded statistic you reference.
Your calculus makes people just a monetary unit to be vilified.
The truth is that all money is borrowed into existence.
Real Estate booms are fabricated and nothing more than Monetary Policy.
Student Loans were nothing more than Monetary Policy accelerating under Obama to stimulate a collapsing economy. For many going to school was the only job in town, but the price was crippling debt for years with an instantly depreciating assett. I believe over 1.5 trillion of stimulus was created in this way, with corresponding currency devaluation.
Wars are nothing more than Monetary Policy.
And the Mother of all Monetary Policies in the History of Humanty are Baby Boomers both at birth, and more significantly during their Geriatric phase.
These Monetary Policies are not an accident, but a feature of a Declining Fiat Empire in its Last Throws of Significance.
These people you denigrate for Monetary reasons are the temporary solutions for balance sheets that would otherwise fail.
Even Fraud itself is Monetary Policy, directing cash flow fingers into a leaking dikes of long periods of previous fiduciary chaos which were in fact just Monetary Policies of the past.
The love of Money is all an Elegant thing until of course when it isn’t.
Let us not pretend what is actually going on here.
And then you have this issue…
https://www.independent.co.uk/news/world/americas/america-brain-drain-trump-us-immigration-b2851223.html
Thanks to the availability of credit.
great point.
Why this isn’t a problem!
The difference is the frauds within the states welfare systems. This is not calculated as PCI because it supposedly does not exist. However the expenditures are reported based on stats unrelated to individuals.
It’s now easy to estimate the amount of fraud in US.
Fraud = Real Spending – Personal Income
🤣🤣
Might not be to far off!
also many parts of usa are cash business not reported. places in southwest cities with huge percentages of mexican immigrants. lived in mexican hood in phoenix for 13 years. it’s all cash for everything. government gets sales tax. sometimes.
Beware the K shaped economy turning into an L shaped one.
“The logical response to persistently high inflation is ‘high living’.”
— Milton Friedman
Rapture is coming, and Jesus won’t take anyone with cash.
…vs God helps those who help themselves?
Is that in the bible?
The savings rate ticked down to 3.5% in November from 3.7% in October.
Tough to say what the savings rate should be given today’s historically high age of the population. The elderly are probably drawing down their savings accumulated over their lifetimes.
We should expect to see the growth in spending exceeding the growth in income as the population continues to age.
Many elderly are seeing their incomes and net worth increase much faster than spending. Also, don’t forget that many elderly have income streams *in addition* to savings. I don’t agree with your conclusion. Additionally, in a world where the yearly fiscal deficit spending is 6%, there’s no reason to draw your conclusion.
PI and PCE are both skewed in favor of those in the higher income brackets. In the highest brackets, income will greatly exceed consumption (how much can a rich person really consume, after all).
This would suggest that the population whose consumption exceeds income are mostly those with lower incomes. This would be apparent if we could see the medians or percentiles for these numbers. Does this data exist?
In other words, if I’m right, the dissaving by the bottom half will look even more extreme than what Mish shows in the first chart. That would be ominous for the lower income groups, which would include many in the working class MAGA base.
But maybe this is not so ominous after all. Ag Secretary Brooke Rollins says the poor can feed themselves on $3 per day, so if they spend more than they earn it’s their fault! They just need to tighten their belts! Losing weight will be beneficial!
$3 per meal, I think she meant ……
Tied to this is the record high credit card debt, early Jan saw approximately$1.21 trillion to $1.23 trillion averaging out to each credit card user carrying a balance between $5,595 and $6,523. Which can signal a weakening future economic growth & at the least stressing consumers. It really feels shaky.
Mish says Real Personal Incomes peaked in April 2025. But those figures don’t reflect the top 10%. Their incomes have been surging for over several decades.
This has happened continually under both Political Parties so it’s a unified trend.
https://www.nationofchange.org/2025/03/05/since-1975-79-trillion-has-been-redistributed-from-the-bottom-90-to-the-top-1/
Always a good read Mish….more inflation is good for gold!
Thanks
Please tell that top those leaving because they do not like my support of the constitution regardless of who is in power.
Some may be leaving because they fear retribution from Big Brother?
When you compare the news we get from you regarding the ICE activities in Minnesota vs the sterilized promotions of Trump and Vance on mainstream media? Well, its quite a different story…
As always, thanks for the depth and breath of your coverage.
Now, about that gold market…
😉
… because they fear retribution from Big Brother…
good move, “complying in advance”
are we mice or men?
I have disagreed with you on many things over the years, but I value the honesty of your blog and so I keep coming back. The ill effects of the abandonment of the constitutional norms and standards of governmental behavior is the one thing all should agree on because there needs to be a bottom to this so we can continue to have the freedom to disagree.