Economists missed this result by miles.
The BEA’s Personal Income and Outlays report for February 2026 shows an unexpected decline in personal income and a big decline in real (inflation adjusted income).
Personal Income and Real Personal Income Month-Over-Month
Personal Income: -0.1 percent
Real Personal Income: -0.4 percent
Real Disposable Personal Income: -0.5 percent
Real Personal Income Excluding Transfers: -0.4 percent
The Bloomberg econoday consensus opinion was for personal income to rise 0.4 percent in a range of +0.2 percent to +0.4 percent. No economist came close.
Real Personal Income Excluding Transfers
Q: Why the green highlights on Real PI Excluding Transfers?
A: That’s the number the NBER follows to call recessions.
For the last three months, Real PI Excluding Transfers has been -0.1 percent, +0.1 percent, and -0.4 percent.
Personal Current Transfer Receipts (i.e PCTR or transfers) are government payments for which no current services have been performed.
Examples include Medicare, Medicaid, Social Security, disability payments, and food stamps (SNAP).
Real Personal Income and Real Disposable Personal Income
Trump and Biden unleashed a huge wave of inflation with free money handouts. All were paid under Biden, but Trump signed the first bill. The third and largest handout was totally unwarranted and did the most damage.
Year-over-year CPI Inflation peaked at 9.1 percent in June of 2022, about 15 months following the end of the record stimulus.
Real Personal Income and Real Disposable Personal Income Detail
If it feels like you are not getting ahead, here’s the simple explanation: You aren’t getting ahead.
Real personal income, Real PI excluding transfers, and real DPI are all lower than they were in April of 2025.
Earlier today I noted the second consecutive set of downgrades to fourth-quarter GDP.
For discussion, please see Significant Downgrades to Fourth-Quarter 2025 GDP, What Happened?
Looking ahead, inflation from the war in Iran is going to weaken real incomes and real GDP. The Fed may be forced to hike rates.
The war has been a disaster on many fronts.
And the Fed is in a difficult spot. The only way the Fed will cut rates is if demand destruction from job losses is sufficient to reduce the inflationary impacts of war and tariffs.
This is not a good economic setup for the average person regardless of what it does for corporate profits.
This post originated at MishTalk.Com
Addendum
A new reader asked “Did you post articles like this during the Biden Administration?”
I replied Why don’t you search my blog for “Biden Inflation” without the quotes and see for yourself.
There you go. I made it easy for you. Click on the link above.
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