Personal Income And Outlays


The “oh it’s getting better” nonsense was amusing – and nauseating this morning over this report.

Personal income increased $54.5 billion, or 0.4 percent, and disposable personal income (DPI) increased $47.3 billion, or 0.4 percent, in December, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $69.5 billion, or 0.7 percent.  In November, personal income increased $44.9 billion, or 0.4 percent, DPI increased $39.0 billion, or 0.3 percent and PCE increased $35.4 billion, or 0.3 percent, based on revised estimates.

This looks reasonably good, right?

Let’s keep reading:

Real disposable income increased 0.1 percent in December, compared with an increase of 0.2 percent in November.  Real PCE increased 0.4 percent, compared with an increase of 0.2 percent.

In other words, we’re spending more than we make (again) and when one subtracts out inflation there is no meaningful increase at all in personal income.

That’s bad.  What’s worse is how we’re getting there.

Let’s look at the raw numbers –

Disposable personal income (DPI) — personal income less personal current taxes — increased $47.3 billion.

There’s the number – $47.3 billion.   What did the government borrow and spend in December – that is, how much did the government hand out that was not received in taxes?


Now you can argue all you want over the $47 billion being “good”, but in point of fact more than three times as much as borrowed and spent by the government, which went to people and, incidentally, shows up in GDP too – every dime of it.

As a result I hope you’ll excuse me if I’m less than impressed with a personal income and outlays number that reflects not only massive government support, but would be in all-on collapse were it not for that support.

Indeed, in the coming months we will see even more of it, since Obama has passed a reduction in the payroll tax which will reduce personal current taxes while not changing actual income.  This will further shift “income and outlays” support over to the government’s deficit spending.

This is exactly how we got in trouble in 2007, but in that case it was private debt that finally tipped over and spilled all the marbles.  Now we’re doing the same thing, but with government debt.

For how long will we get away with it?

The Market-Ticker