June Personal Income And Spending Show Pandemic Cushion Approaching Depletion

How well personal income and spending held up throughout the pandemic is one of the best things about the government response.

For June, nominal personal income increased 0.1%. After inflation, however, it decreased -0.4%. Nominal personal spending increased 1.0%. After inflation, it still increased 0.5%. Here are the real figures for both personal spending and disposable income:

Expenditures are up 2.7% since right before the pandemic, while income is up 3.3%.

Here is how real personal spending compares with the other side of the coin, real retail sales:

Both of these have returned to basically normal levels m/m. While the stimulus has abated, spending hasn’t crashed. That’s a good thing.

The cushion of the increased pandemic stimulus has also largely faded in the personal savings rate:

This tells us that within the next few months that cushion is probably going to be exhausted, and consumers are going to have to stand on their own.