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Real Disposable Personal Income (DPI) Minus Real PCE

Today the BEA released Personal Income and Outlays report for October and November.

• Personal income increased $30.6 billion (0.1 percent at a monthly rate) in October, followed by an increase of $80.0 billion (0.3 percent) in November
• Disposable personal income (DPI)—personal income less personal current taxes—increased $12.0 billion (0.1 percent) in October, followed by an increase of $63.7 billion (0.3 percent).
• Personal consumption expenditures (PCE) increased $98.6 billion (0.5 percent), followed by an increase of $108.7 billion (0.5 percent).

Real Income and Spending Percent Change

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Real Disposable Personal Income (DPI) and Real PCE

The lead chart shows the result of subtracting Real PCE from Real DPI. Differences, if any, are due to rounding.

The net result has been negative for seven months starting April 2025.

Personal Income and Real Personal Income

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Personal Income and Real Personal Income, annualized

April 2025 Peak

Real DPI, Real PI Minus PCTR, and Real DPI Minus PCTR all peaked in April of 2025 (red highlights).

Spending is still surging, which explains the lead chart. Every month since April, real spending has exceeded real income.

The NBER, the official arbiter of recessions, uses Real PI minus PCTR in its recession analysis.

What Is PCTR?

PCTR stands for personal current transfer receipts, money from the government for which no current services have been performed.

Medicare, Medicaid, Social Security, Disability payments, and SNAP (food stamps) are key examples.

You may feel like you earned your SS payment and I won’t argue. But no current services (work) by you are involved.

How Long Can This Last?

The snarky, but correct answer, is until it stops.

A jump in medical care expenditures in January is highly likely to make things worse.

Minimum wages hikes did go up in January of 2026 in 19 states, but that only impacts those making the minimum wage.

Wage hikes will not come close to balancing out health care premiums. A much bigger shock, but in the other direction, will happen in April with tax refunds.

Against that, we need to factor in rising unemployment and fewer hours working.

I will do some posts on PCTR, minimum wages, and income tax tax refunds shortly.

Related Posts

January 21, 2026: Expect a Big Divergence This Year Between CPI and PCE Inflation

Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.

January 22, 2026: PCE Goods Inflation Has Bottomed, Services Poised to Explode Higher

Looking ahead, expect a huge surge in PCE inflation.

Regarding the stagflation theory, please see Might the Next Interest Rate Move by the Fed Be a Hike?

It’s time to discuss the real possibility of a renewed surge in inflation.

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