Wed. May 29th, 2024

Growth in Spending Exceeds Growth in Income for Most of the Last 10 Months

Tyler Mitchell By Tyler Mitchell May23,2024 #finance

A deeper dive into personal income and outlays for March shows significant signs of consumer stress to maintain standards of living.

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

This is a follow-up with a couple new charts to my post on Friday, Personal Spending Jumps More than Income in March

Income Minus Spending Chart Notes

  • Real means after inflation. DPI means disposable Personal Income after taxes.
  • Only twice in the last 10 months has growth in real income been greater than growth in real spending.

Personal Income Four Ways

Understanding Personal Income

  • The difference between PI (red) and DPI (blue) is taxes, just over 3 trillion dollars annually.
  • The difference between DPI (blue) and Real DPI (yellow) is inflation.
  • The difference between Real DPI (yellow) and Real DPI Minus PCTR (green) is Personal Current Transfer Receipts

PCTR are government benefits that include Medicare, Medicaid, food stamps, Social Security, and disability payments.

Personal Income and Real Hourly Wages

Income data from the BEA, hourly earnings from the BLS, chart by Mish

Percentage Increases in Income and Hourly Earnings

  • DPI is up 25.2 percent since pre-pandemic
  • Real DPI is up 6.6 percent since pre-pandemic
  • Real Average Hourly Earnings are up 0.9 percent since pre-pandemic

Income includes wages and salaries, Social Security and other government benefits, dividends, and interest.

Who’s Doing Well and Who Isn’t?

Those dependent on wages and salaries alone have not fared well since the pandemic. That also includes many on government benefits.

The asset holders (those with interest income, rental income, dividend income etc., are doing much better.

On average, things look at least OK, if not good.

But for millions of people struggling with food and rent on real hourly earnings that have gone nowhere in four years, the economy does not look OK.

The CPI Rose Sharply in March Led by Shelter and Gasoline

The CPI rose 0.4 percent in March. Rent was up another 0.4 percent with gasoline up 1.7 percent. Together, the pair was about half of the total rise.

Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.4 percent in March.  Rent of primary residence has gone up at least 0.4 percent for 31 consecutive months! 

The “rents are falling” (or soon will) projections have been based on the price of new leases and cherry picked markets. But existing leases, much more important, keep rising.

Only 8 to 9 percent of renters move each year. It’s been a huge mistake thinking new leases and finished construction would drive rent prices.

For discussion, please see The CPI Rose Sharply in March Led by Shelter and Gasoline

If you own your home and refinanced near or below 3.0 percent, congratulations. If you are among the 36 percent who rent, you are probably not happy.

This is why I suggest People Who Rent Will Decide the 2024 Presidential Election

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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2 thoughts on “Growth in Spending Exceeds Growth in Income for Most of the Last 10 Months”
  1. It’s concerning to see that real income growth has been outpaced by spending growth for most of the last 10 months. The data highlights the financial stress that consumers are facing in trying to maintain their standard of living. It’s crucial for policymakers to address this trend and support those who are struggling financially.

  2. It’s concerning that growth in real income has been consistently surpassed by growth in real spending over the past 10 months. This trend reflects the struggles faced by many consumers in maintaining their standards of living. The disparity between income and spending is a clear indicator of financial stress for households.

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