Real personal income is... well, it depends

I am sure that consumers have really appreciated their stimulus checks, but from the perspective of those of us trying to figure out what is really going on in the economy, they really suck. The latest Personal Income and Outlays report, for June, from the Bureau of Economic Analysis (BEA) shows that personal income was up +0.1% in June over May, but disposable personal income was down -2.6% for the month in inflation-adjusted terms. Personal spending was up 0.6% but down -0.2% after adjusting for inflation. Sure, that decline of -2.6% looks depressing, but that was after a +5.2% gain in May, due to the uneven nature of the distribution of the stimulus checks. The bottom line is that we need to wait another two or three months to see where the economy is after that stimulus money has been digested and cycled around the economy.

One useful measure is to look at per-capita real disposable income, which filters out population changes and inflation. It did show a -2.71% decline from May to June, but that was after a +5.11% gain in May. June was still +2.29% higher than March and +2.47% above a year ago.

You can think of the stimulus checks as a lifeline or life support, but the fact remains that the money is now out there influencing the economy.

It is also worth noting that population growth is in fact helping to keep the economy "afloat", even though this will not make the people in the "lifeboats" feel any happier.

Yes, all of this muddies the "calculation" of whether the U.S. economy is in a recession, but "it is what it is."

-- Jack Krupansky