Real Income and Sending data from BEA, chart by Mish

Please consider the BEA's Personal Income and Outlays Report for December 2022.

• Personal income increased $49.5 billion (0.2 percent) in December, according to estimates released today by the Bureau of Economic Analysis. 
• Disposable personal income (DPI) increased $49.2 billion (0.3 percent)
• Personal consumption expenditures (PCE) decreased $41.6 billion (0.2 percent)
• The PCE price index increased 0.1 percent. 
• Excluding food and energy, the PCE price index increased 0.3 percent.
• Real DPI increased 0.2 percent in December
• Real PCE decreased 0.3 percent; goods decreased 0.9 percent and services were unchanged.

I created some new charts this morning to better show the above bullet points.

Disposable Personal Income Three Ways

Disposable Income from BEA, chart by Mish

Income Notes

• Disposable Personal Income (DPI) means after taxes
• Real Disposable Personal Income means after taxes and adjusted for inflation
• Transfer payments are payments made or income received in which no goods or services are being paid for. Social Security, Medicare, and Food Stamps are transfer payments. 
• DPI rose 0.3 percent. Real DPI rose 0.2 percent. Real DPI excluding transfer payments rose 0.2 percent.

PCE Three Ways 

Personal Consumption Expenditures from BEA, chart by Mish

Real PCE Three Ways 

Real Personal Consumption Expenditures from BEA, chart by Mish

Brick Wall 

• Consumers literally hit the brick wall then went into reverse in November and December. 
• Real PCE Goods were negative 0.9 percent in both months. 
• Real PCE Services rose 0.2 percent in November and was flat in December.

Fantasyland View

Some believe strength in services shows real strength in the economy. They are wrong. 

Much of service spending in nondiscretionary.

If rent goes up (and it has been rising steeply) people pay it. If insurance goes up people pay it. If the cost of medical care goes up, people pay it. 

Data Consistent With Recession

For discussion, please see A Better Definition of Money and Lacy Hunt's Thoughts on When a Recession Will Start

Also see Alice Debates the Mad Hatter and the Red Queen on Timing the Recession

Once again, data is consistent with a recession starting in November or December. 

If for some reason you believe fourth-quarter GDP was robust, please see 4th Quarter 2022 GDP Is Much Weaker Than Headline Numbers, Recession Is Not Off.

Look at the above charts and think about how much October influenced fourth-quarter GDP.

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