Chart Notes

• Disposable means after taxes
• PCE means Personal Consumption Expenditures
• Real mean inflation adjusted by the PCE price index

The Personal Income and Outlays Report for February 2025 sports a mixed bag of strong income, stronger than expected inflation, and weak real spending.

The PCE price index was hotter than expected in February. Yet despite a surge in incomes, real spending was weak.

Personal Income

• Personal Income increased $194.7 billion (0.8 percent at a monthly rate) in February
• Disposable personal income (DPI), personal income less personal current taxes, increased $191.6 billion (0.9 percent)

Personal Income and Real Personal Income

(Click on image to enlarge)

PCTR stands for Personal Current Transfer Receipts, income for which no services were performed. Examples include Medicare, Medicaid, food stamps, and Social Security.

The pandemic free money spikes stand out. DPI did not exceed the March 2021 high until December of 2024 (blue highlights). Real DPI has still not exceeded the March 2021 high (yellow highlight).

Free money and inept Fed policy spurred massive inflation that the Fed is still fighting.

Real PI Minus PCTR

Note the orange line, Real PI minus PCTR. That is the line the NBER uses to assist determining recessions.

Real PI minus PCTR was 16,397 in January. It’s now 16,415. That is a very weak rise of 0.1 percent.

Personal Current Transfer Receipts

(Click on image to enlarge)

PCTR surged surged 2.2 percent in February. Real PCTR rose 1.9 percent.

PCTR fueled income in February. A big uptrend started in December 2023 with another spike this year.

Hooray, free money! I somehow suspect Biden is behind this, but I have not investigated the surge.

The important point is the surge in income is not what it seems.

I will cover PCE inflation in a separate post.

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