Today the BEA released April data on inflation-adjusted income and spending. Let’s discuss the charts.
Personal Income and Wages Key Points
- DPI stands for Disposable Person Income. Disposable means after taxes.
- Real means inflation adjusted.
- Income includes wages, dividends, rent and all sources of income.
Workers who don’t receive dividends or rental income view the world as shown by the red lines. Those who have no assets are renters.
Index of Hourly Wages and Multiple Jobholders
One reason Disposable Personal Income is up: People need to work multiple jobs just to make ends meet.
This is also reflected in the blue line in the lead chart.
Personal Income Four Ways
Personal Current Transfer Receipts
The above chart introduces Personal Current Transfer Receipts (PCTR). PCTR is income for which no goods were produced and no work performed.
PCTR includes Medicare, Medicaid, disability payments, food stamps, rent assistance, and Social Security.
PCTR is included in Disposable Income in all of the above charts.
The green line in the above chart shows Real DPI minus PCTR. Please compare the green line to the red line.
PCTR as a Percentage of Real Personal Income
Hoot of the Day
One of the reasons people are angry is the inflation-causing free money ran out. People increasingly have to work multiple jobs to make ends meet.
CPI Up 0.3 Percent With Rent Still Rising Steeply
Rent rose another 0.4 percent in April. Food and beverages were flat with food at home declining but food away from home rising.
Key CPI Points
- Rent is up at least 0.4 percent for 32 consecutive months.
- The CPI weighs rent much higher than PCE. That’s why the CPI is up 3.6 percent from a year ago and PCE only 2.7 percent.
- All of the preceding income charts would look much worse if adjusted by the CPI rather than the PCE price index.
Please read those points again. The first three income charts are worse than they look if adjusted by the CPI.
For discussion and additional CPI charts, please see CPI Up 0.3 Percent With Rent Still Rising Steeply
Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in April. Rent of primary residence has gone up at least 0.4 percent for 32 consecutive months!
Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation
The Case-Shiller national home price index hit a new high in February. Economists don’t count this as inflation.
This is a bonus image.
On May 2, I sarcastically commented Home Prices Hit New Record High, Don’t Worry, It’s Not Inflation
That chart is one month stale now. We hit another new record in March.
The Fed’s Preferred Inflation Measure, PCE, Shows No Further Progress
More weakening: Real (inflation-adjusted) Income and spending was negative in April. The PCE price index remained flat at 0.3 percent for the month and 2.7 percent for the year.
Earlier today I noted The Fed’s Preferred Inflation Measure, PCE, Shows No Further Progress
This post contains four charts related to personal income and outlays discussed above.
Anger Synopsis
Consumers are angry, and it’s reflected in the polls. I have been discussing the reasons for angry consumers all year.
But Biden and most economists still don’t get it. They think the economy is doing well. Tell that to renters looking to buy a home, stuck with rent going up month after month.
People Who Rent Will Decide the 2024 Presidential Election
On April 20, I wrote People Who Rent Will Decide the 2024 Presidential Election
Who Are the Renters?
The answer is younger voters and blacks.
The Apartment List 2023 Millennial Homeownership Report shows Millennial homeownership seriously lags other generations.
Generation Z homeownership is dramatically lower still.
And according to the National Association of Realtors, the homeownership rate among Black Americans is 44 percent whereas for White Americans it’s 72.7 percent.
That’s the largest Black-White homeownership rate gap in a decade.
Will the Conviction of Trump Matter?
I doubt it. People will vote with their pocketbook.
For discussion of the political side, please see Trump Found Guilty – a Travesty of Justice for America
If you are not interested in politics, please ignore that link and focus on the rest of this post.
Returning to the economy, inflation will finally come down when rent abates but there will be a price. The price is recession.
I expect a recession this year. It will not surprise me at all if a recession started in 2024 Q2, perhaps April.
Thanks, but those aren’t pictures. Those are charts.
“One of the reasons people are angry is the inflation-causing free money ran out. People increasingly have to work multiple jobs to make ends meet.”
Some 10,000 fast food workers in California lost their job after the state mandated $20 an hour, starting in April. Others have had hours cut back in order to compensate for the increased cost to employers. Costs for customers went up as well. Apparently, near 80% of customers consider fast food to be a luxury now. With the state budget catastrophe, Newsom is looking to postpone wage increases for health care workers.
The Teachers school Marxist indoctrination Union is upset about planned budget cuts. Newsom is also going to court to obstruct democracy by preventing us from voting on taxes, which will cause more inflation for tax payers if he wins.
Just 3-4 months before the election the Fed will allow enough price and asset deflation for the media to claim economic success. Falling rent, lower food prices and lower asset prices will be bombarded daily and that is all the people will remember before they vote for the left again
People don’t need the main stream media to give them “news” on the economy. They already know the state of the economy 1st hand by their money not being able to buy what they used to. Their rent isn’t going to decrease just because the msm said so.
Nothing in the world would make my landlord lower the rent. Elevator buildings are in big demand. GenX is installing their elderly parents in here – cheaper than the assisted living communities.
This is why Trump is going to win in a landslide. The conviction is going to bring more people out to vote and they will be voting Republican down the ticket to get a majority in the house and Senate.
I was hoping to see a boarded up Red Lobster and a porch pirate’s house getting robbed by another porch pirate.
as i predicted, trump already losing 10% of republican votes in new polls.
https://www.reuters.com/world/us/one-10-republicans-less-likely-vote-trump-after-guilty-verdict-reutersipsos-poll-2024-05-31/
so much for all the “this will boost trump” and “I’m now voting for trump” nonsense.
the math don’t lie, it’s the only pure truth in the universe.
That’s fabulous news for you. Now you don’t need to consider replacing Biden. You got this thing in the bag.
For me? I don’t give a rats butt who is president, all I care about are profits.
Taxes don’t matter?
Tax law comes from congress not the president. Trump could win but if dems control the house & senate, they will control tax law.
Ultimately it won’t matter anyway, taxes have to go up to pay for the growing $34 trillion debt. There is no other way.
Biden will tax your profits away.
There are no polls currently that capture the verdict. Nice try son. Your nose is even getting longer.
did you not click the link.
“WASHINGTON, May 31 (Reuters) – Ten percent of Republican registered voters say they are less likely to vote for Donald Trump following his felony conviction for falsifying business records to cover up a hush money payment to a porn star, according to a Reuters/Ipsos poll that closed on Friday.”
Get your kid to read it to you.
This is likely bullshit
too early to tell
Yeah I predict the RNC may nominate someone else in the family or a loyalist. By August this is going to be a complete shitshow for Trump.
Anyone who believes an immediate snap poll on this and thinks it will stick, is nuts.
It might, or might not, but let it settle. I bet this will be over by the convention.
That’s not anytime soon. It seems like a lot is happening everyday. Even 2020 wasn’t like this. November seems like an eternity away.
Agree. I think the conviction will be overturned on appeal.
The country seems down but we will have a common enemy soon I predict. This summer feels very 2001ish.
And who will be the common enemy?
I was planning to vote for RFK, but due to the sham trial and verdict, I will now vote for Trump. If he wins, he needs to prosecute O-bomb-uh, Hillary Clinton, and both Bidens.
Good luck with all of that.
Dennis Quaid just said he may vote for Trump. There are other people out there who are going to vote Trump, but aren’t being public about it. They see just how corrupt the Stalinist Democrat Party is.
I thot it would be pics of fat people crying at the drivethru prices
I see a lot more people ordering from the value menu. America needed to slim down anyway. Maybe this will help.
Gas prices are down $1.00 per gallon in the last 3 days where I live. More than a 25% drop.
I’m in the middle on the economy and on Biden and Trump. I think we’ve been trying to prevent a real recession for too long so I would welcome one.
Most of the people that are angry don’t even do well or get ahead in good times. They are the complainers who tend to want things handed to them on a silver platter. Life doesn’t work the way they thought and this is the real source of their anger.
In the flyover areas rent and home prices are rising faster than in CS top ten since 2018, coming from behind, but the cost of food and energy is lower.
1M SPY, May : a large bar on the lowest green vol in years. May close > Mar high.
Chart #3 : PCTR is yellow minus green, It’s 3.5T. Gov goodies are shrinking. The GDP is rising. In 2021 PCRT was 7T. Gov debt is rising. The PCRT doesn’t cause it.
It is strange that Politicians can do ALL of this harm with policies that have BATTERED the poor, made the Middle Class Cringe and ENRICH the top 2% and then act and speak as if all is well.
That is the BIGGEST LIE EVER. They KNOW what they are doing. THEY DO NOT CARE because they are FINE, MAN!
“COME ON MAN!”
Politicians are funded by the top 2%, so that’s who they represent. The top 2% also own the media. And the poor and middle class get constantly propagandized by the media to vote for one or the other subsection of the top 2%. That’s just the way it works. Look at posters here: constantly drooling over another rich guy who will save them! All you can do is watch the way the government moves and find jobs and investments in the areas serving the rich. The Supreme Court’s decision Citizens United, declaring corporations to be people, was the coup d’etat that ended the old America. There is no going back. But you can be successful in the new system by watching what they do and having a willingness to throw your morals and ethics out the window.
I think your perceptions are right in some ways as far as the propaganda and both parties causing big problems for our nation, but throwing ones ethics and morals out the window is a grave mistake that will only bring pain, misery, and destruction on ones self. It’s been known for thousands of years in common sense and scripture that is freely available. No one gets away with anything.
The Michigan consumer sentiment survey breaks its sentiment indicator down into how Democrats, Republicans, and Independents feel about the economy. It turns out that as the country has become increasingly partisan over the last two decades, Democrat and Republican consumers base their feelings about the economy increasingly on who sits in the White House. Right now Republican consumers are hopping mad (a sentiment discount of 15 percent relative to overall sentiment), while Democrat consumers are feeling pretty happy (a sentiment premium of 17 percent relative to overall sentiment; the Democrat index is over 100). When Trump was sitting in the White House the sentiment distribution was exactly reversed, but with bigger discounts and premiums (=Trump was more polarizing). This evidence suggests that whether we (Democrats and Republicans) are angry or not about the economy doesn’t depend on the data Mish reports. And the only guys who have a grip on economic reality are the Independents.
…and Independents are MISERABLE right now.
Not really, but something adverse happened in the May figures across all respondents. Will need to see June.
There was an article on the WSJ (paywalled) that noted that inflation in republican areas really is higher than in democratic areas.
https://www.wsj.com/politics/policy/inflation-differs-republican-democrat-states-data-14800c1e
In new research, economists Carola Binder, Rupal Kamdar and Jane Ryngaert examined Labor Department inflation figures for U.S. metropolitan areas, and compared them with voting data. Their finding: Metro areas with more Republicans and independent voters tended to have higher inflation in 2022 than places where Democrats live.
…
Moody’s Analytics chief economist Mark Zandi reckons that part of what drove inflation higher in Republican-leaning states was housing—especially with so many people moving South after the pandemic started.
So the kicker here is inflation is higher in republican leaning areas and it’s caused, in part, by housing. Unfortunately for repubs, the inflation is in areas that were already going to vote trump.
I don’t buy the narrative that blacks and latinos, who are working two or three jobs, will take time out of their day to vote for trump but only the election will bring that theory to an end. If high inflation in areas populated by Nikki republicans don’t show then it’s all over for trump.
The with Mark Zandi postulating that it’s housing is that housing isn’t really accounted for in inflation as we all know.
I’d postulate that the problem is that the south is poorer in general (average wages are less). So if the cost of goods (including raw materials) increases it affects them more (ie if iPhone goes from 800 to 1000 does it affect someone who makes 30K a year more or someone who makes 75K a year). This is why inflation in raw material and shipping costs is killing poorer people.
There is a long standing narrative here that states, “everyone is leaving big cities (from up north:chicago, new york, etc)” which if true means they are the ones causing inflation by driving up housing prices in the south as well. Those new comers from Chicago & New York will likely bring their politics with them as well. Again, I don’t see where trump is picking up votes but only the election will determine the truth.
I will re-iterate, if trump is picking up votes from some new demographic, it will only offset the seniors that are dying. This election will be determined at the margins.
Except rent isn’t falling in NYC or those other Blue places.
One reason is energy ie the cost to the landlord to heat the home.
Another is migrants renting apts. Not all the recent arrivals are living in shelters in Midtown. Go out to Queens, LI, and even the Hudson Valley and you’ll see FAR more Central/South Americans living in these areas than even a yr ago.
These individuals work (many prob off the books) and believe it or not they’re players in the rent game.
Why the downvote from those downvoting?
Anyway, it’s true what you say about people moving south. The question is whether they are Republican, Democrat or roughly 50/50 of each trying to escape high prices/taxes. My guess is it’s 50/50 trying to escape (assumes both side perfectly logical) which should not change anything.
Inflation got exported by high cost states to low cost states. When you invite everyone with low taxes and delusions of grandeur, it drives up the cost of living for existing residents.
Did any Republicans vote for Nikki, or was it all Dems crossing over in open primaries in an attempt to spoil the primary for Trump?
the Nikki vote was 60% NeoCon GOP (mostly Boomers), and 40% Dem spoilers.
Believe it or not, there are 10s of millions of us old school, country club RINOs who voted for any Republican other than Trump because we can never forgive him for calling the election into question with no evidence and January 6.
We are fighting to get the party back, but it looks like a losing cause.
I was driving down the road in Florida yesterday, and there was a dude on the street corner with a sign saying “I’m still voting for him”. Of course he had taken his shirt off and was wearing cutoff shorts and flip-flops. That’s the new Republican Party.
Well that’s at least one converted democratic voter then because homeless and poor mostly vote democrat for the government handouts.
Maybe they are tired of having to share those with the illegals.
The election was corrupt. There was incredible interference against Trump. Google said they would not allow 2016 to happen again. Facebook and Twitter as well. Mainstream media interfered. The impeachment was election interference. Election rules in certain states were UNCONSTITUTIONALLY changed. Fulton County did not confirm signatures on mail in ballots. You should learn the truth about Jan 6, instead of listening to the Democrats Marxist propaganda.
I am an independent voter.
Die already. You are the problem.
Maybe you should look at the Trump crowds and see the number of blacks and Hispanics. Maybe you should listen to Don King and former black football stars who recently came out for Trump. It is a very real occurrence.
Surveys are an opinion, but are not always accurate or representative. I doubt many of the lower 50% are very happy. But most have likely been Democrats all their lives.
I have seen experiments where people in surveys were incentivized to get as close as possible to the “true state of nature,” say on unemployment and inflation. It turns out that people in those experiments quickly cut their ideological BS if even small amounts of money, say $1, are offered to “get it right.”
“Correcting” for inflation using bogus government inflation figures and calling the result real is a lie on the face of it.
Graph the comparison to effects of CEOs and those with income above $400K ????
Then you will see why they don’t care, and why the lowest 50% are angry.
I know programmers making more than CEOs.
Outstanding charts and commentary, as usual.
The inflation is a symptom. The sad thing is when I look around in California I realize that we could not rebuild everything that is here in any practical length of time. I’m seeing rural paved roads go back to dirt and much of the infrastructure here in LA is in pretty bad shape. The FED has really distorted the economy to support rentiers and pulled resources away from those that actually make and build stuff which doesn’t bode well for our long term success. This hustler culture we have now is sick.
We’ve neglected to educate the next generation, and that’s going to bite hard over the next couple decades. Longer if we don’t start educating.
Immigrants are eating Americans lunch when it comes to education. Many higher educated Americans even in engineering and science gave up and went into banking, finance and real estate..
Great backdrop from the econometric data, Mish. The comments here are mostly an exercise in bullshit, but the numbers are not. No one anywhere else has come close to this blog for those numbers and your analysis of them, and I think you know that I do not hand out compliments casually.
I will watch the U3 data for May and June to get a sense of the spring economy, which I think has been weakening. Inflation as measured by BLS is 22% since January 2020, and that inflation has been the worst in grocery stores and gas stations, along with auto and household insurance that are not adequately measured or included in inflation numbers.
I just got back from an 1,800-mile vehicle trip to the Bay Area and back. aid $6 for diesel down there. Absolutely outrageous on steroids.
Election-wise, the next shoe to drop is if the judge puts Trump in prison. It will not surprise me if that happens. If it does, I would hope (but not expect) that Trump would drop out and endorse the governor of North Dakota. The credibility of the entire political system is hanging by a thread.
This has not happened suddenly but has been brewing for 25 years. We shall see. The Democrats are afraid of elections.
Working poor know they have been played.
Certainly a significant amount of you tube videos produced by Blacks and other minorities demonstrating they are ready for new allegiances.
Inflation and importing illegals has hurt them directly in their wallets and communities.
Do they believe Biden has any economic answers which will make life better?
Not according to the posters.
Will they choose Trump or Kennedy? Trump is a known entity.
Working poor heavily rely upon fossil fuels to make manual labor easier and more productive. Not so hard to understand who has promised to bring energy costs down and who promises to make energy more expensive.
Have they gained ground or lost ground over past four years? Most are really struggling currently to make ends meet.
Far too late for anything to change between now and November in economic outlook for the better. Things may still get worse.
People voice concern over direction of things at this time. It is not idle gossip. It is what they are living.
Prices did not decrease under Volker, BTW, just the rate of price increases. Once they go up, yer screwed.
There’s a huge gap between economists who say “inflation” but mean “year-over-year rate of price level increases” vs. normal people who say “inflation” and mean “current price level”.
Economists see what they call “disinflation”, and proclaim “inflation is coming down”, but normal people see prices continuing to rise albeit somewhat more slowly, and say “prices are still rising you a$$hole!”
The Fed’s shift from “2% upper bound” inflation policy to “symmetric around 2%” inflation policy is a massive failure. The recent experience with >2% inflation has demonstrated the lack of genuine symmetry in the policy response, and that has contributed to entrenching inflation expectations, crossing a tipping point in people’s attitudes.
The de-facto tolerance for >2% inflation has led to a tipping point in people’s attitudes.
We should return to the statutory inflation policy: price stability = 0% average inflation; Fed should stomp on any excursions outside of -1% to +1% range.
“People will vote with their pocketbook.”
Yes, Mish, we will vote with our pocketbook. We sure will.
Who’s angry? Groceries are up but this is the most wealth I’ve ever had. What could make things better? Maybe lower interest rates so people can remove their golden handcuffs.
The majority of Americans have no real investments and live hand to mouth. I didnt realize until I left my upper-middle class Chicago suburb just how poor Americans really are. 1/3rd rent not cause they want to — cause they have to.
“The majority of Americans have no real investments and live hand to mouth. ”
I don’t know if I believe that. No investments? On the contrary I don’t know anybody that is HURTING, there are literally jobs everywhere.
Spend a few seconds looking at actual data on wealth distribution and you’ll believe it. Well over 50% of people have essentially zero savings. Over 50% is a majority for those who are math-impaired. You obviously live in some kind of partisan bubble where any facts that run counter to your narrative are threatening to your politics.
Man… you must have fancy friends.
Are you running for public office because your tone deafness qualifies you!
Where is it that you live? What does your work/friend/acquaintance look like (are they all retired rich people)?
You’re a buffoon. Americans are hurting everywhere. Walmart has seen an influx of shoppers due to customers trading down. Just look at their blowout quarters and then compare higher priced retail like Target. The proof is all around you. Food banks are seeing more folks than at any point during the COVID nonsense. Get real man.
They aren’t hurting in my town. Too many coastal cash-ins moving in. Good government fostering healthy job creation.
You need to get out more.
I’m not trying to be sarcastic or anything, but I’m curious if you ever consider being a landlord? Even helping one or two renters on a small scale would be helpful, especially if many people did it.
I have included a guest house, carriage house, or ADU in every house I’ve built in the last 20 years. My current house has a 750 sq.ft. 0ne bedroom apartment on the second floor with a private deck, water view, huge tile shower, quartz countertops, etc. I rent it furnished with all utilities for $900/ month to a local working class person. This pays all the expenses for the entire place; property tax, utilities, insurance, upkeep. It’s also nice to have someone on the site when I’m in AZ for the winter. Sure, I could get 2 or 3 times that for the unit but why? I don’t need the money.
Since things opened up after Covid. We have been doing more US travel. You are correct, most folks are not getting ahead and many are dirt poor. Why sneak into a country to join this bunch?
Your nominal wealth is higher at the moment, but is that sustainable, and what will it actually buy you in 20 years?
You don’t know what awaits us all.
I see a high likelihood of continued price inflation, higher interest rates, higher unemployment and a deep recession, and resulting major plunges in “wealth metrics” (asset prices).
A dirt nap awaits us all. The smart play is to make the most of what’s before that.
People are always angry. The difference this time is, since 1970, pay for the average non-supervisory worker has been flat after inflation. The average worker is going nowhere except thru credit. Meanwhile, the productivity gains since 1970, which were substantial, all went to the owners and high income people Result: millions of people working for the same amount of money watching their friends and neighbors going to Punta de la Gorda every year, and they cant. Ergo: The MAGA movement, Jerry Springer, and Trumpian despondency.
Very astute comment. Yes, people are angry and I keep asking how trump is going to fix things with his tariff happy trigger and toxic approach to everything else and I get crickets….the real answer is he won’t, four years will pass by and things will be the same or worse then we’ll repeat the angry cycle all over again.
Its pretty clear he’s not a fixer or a detail guy. He is all about the fame.
The problem is, there is no one, in government that will solve these problems. We are governed by a bunch of Jared Bernstein’s that don’t really know anything about money, or economics. It will take an existential crisis to get to a solution, or a reset of this mess.
Bravo! you get a gold star Dennis. no one is going to save you except you. And I see lots of comments to the tune of “burn it all down” but that means no social security and no medicare for the 72 million socialists.
People should be careful what they wish for because it’s not going to end up the way they think it will, it never does.
For once I agree with you, MPO. Things are turning down fast. One does not have to have a wish however…it is going to go the way it will go despite wishes or prayers or HOPING.
They literally don’t care. They’re mad, so HULK SMASH!
Energy will undoubtedly be lower with a second Trump term. Just that alone would probably decrease everyone’s household expenses by 2k.
Hey Scott. Fuck you
Watch for Biden to take large measures to artificially bring down gas prices in the fall. Releases from the strategic oil and gasoline reserves, for example. Oh yeah, and more vote buying with student loan forgiveness and whatever he thinks will pander to black folks. It’s going to be destructive.
Gas prices drop in the fall because peak driving season ends after summer so that’s already a given regardless of what biden does.
Thank you captain obvious. We all know that. Doesn’t change the fact that Biden will still interfere in the market. He did it in the fall before the midterms in 2022, so there’s precedence.
And if he didn’t you’d be crying about gas prices. You permavictims are too much.
That’s quite a leap. Nowhere in my comments did I complain about gas prices. Apparently you are emotional and easily triggered.
Hey Chester, go fuck yourself
Aww Hank… don’t be a sore loser.
I’m mad as hell and I’m not gonna take it anymore
Ok. Now what?
Someone should DO something about this outrage!
We need a hundred million voters to say that, and mean it. And it needs to start at the primaries to get all these gomers out of government.
Someone has to actually run to get the incumbents out. That’s going to take a grass roots movement of young people (under 50) running for office starting everywhere (city councils/mayors, state level, federal level).
That might be too young. Someone in their 50s could know the way life was before yet also know what the world after computers is like. They would be old enough to have wisdom to see the good and bad of both eras.
I’m in my 50s and I don’t disagree with what you said. But the problem is, I am in the ‘good’ economy (the one which owns homes, stocks, has a good job etc), not the one where you don’t own much etc.
If the people who don’t own much need representation it’s going to have to come from people under 50, most likely people under 40. Also, such a movement may take 10+ years for them to get into lots of positions (ie get rid of who is there) which makes it better suited for people in their 40s and 30s if it’s a 10-20 year process.