Place your bets folks!
Four out of the last four months real personal incomes have NOT kept pace with inflation. I’m thinking that tomorrow, the next http://bea.gov
press release will take it five-in-a-row.
What do you think?
I also believe
1
The media spin on it will be something like “Soft landing coming soon. Inflation is not-as-bad as before,” or “Joe Biden rocks! The economy is wonderful.”
and 2
That we are in a 60/40 economy.
When tomorrow’s raw average shows that incomes are yet again to keeping pace with inflation it will actually be the case that the top 60 did well and the bottom 40 got hit hard. I won’t be able to prove that but I thought I’d put it out there.
Not going to end well. Only credit and spending down savings is keeping things going right now, and both of those are reaching their limits.
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True,
That is most of it.
There is one other big factor:
Roughly 35% of US households fall into the category “own their home an pay a monthly mortgage.” Nearly everyone in that group recently refinanced their mortgages and got the equivalent of a ~$1,000/month raise and monthly savings among that group did not increase one little bit.
They are buying Chinese electronics, and stocks, and private schools for their kids and Taylor Swift tickets and bitcoin and, until recently, trips. Don’t get me wrong, I am genuinely happy for those folks.
BUT, spending that comes from winning the mortgage lottery, is not the same as spending that comes from strong economic fundamentals. It tends to have bubble-like qualities.
That type of spending feeds inflation and they won’t be able to refinance another payment reduction when costs eat up their largesse.
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A swing . . . and a miss.
My prediction did not pan out.
In October, real disposable personal income increased slightly faster than inflation.
I think it was my failure to account for low oil prices
Anyway, I am not sure how/why the scale changed on the Fed’s chart but it is accurate. I predicted a fifth red bar in a row and did not get one.
There’s always the revision in a few months when they’re confident that no one important is paying attention anymore. 
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LOL that can happen.
The fact that per capita real incomes keeping pace with inflation four months in a row is pretty significant.
Making it happen is pretty easy-peasy. Some 40-plus percent of the US population does not work, (they are kids, they are retired, they are in jail etc…) Since most illegal immigrants work, every time one comes here and gets a job, per capita income should rise. (Illegals do not come here in the same 60-40 working to non-working ratio as the rest of the population.)
When that does not happen it typically means either
- inflation is high and wages did not keep up, or
- the latest jobs taken by illegals were very very low-paying jobs.
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