The personal income & outlays BEA economic report for April 2011 is out. PCE or personal consumption expenditures increased 0.4%. Personal Consumption Expenditures are part of GDP, which had increased 2.2% for Q1. Take away inflation and PCE increased 0.1%. Real PCE, or personal consumption adjusted for inflation, is what is used to imply real GDP growth. Today's report has negative implications for Q2 2011 GDP.
Personal income increased 0.4% in April. Below is personal income, not adjusted for inflation, or price changes.
Disposable income is what is left over after taxes. DPI or disposable income increased 0.3% for April, but adjusted for inflation, was a big fat 0.0%. These numbers include income of the uber-rich.
Below is disposable personal income minus personal consumption expenditures monthly raw total changes.
Below is real disposable income per capita. Per capita means evenly distributed per person.
Pretty flat monthly change huh? The population in the U.S. increases approxminately 200,000 every month. What sounds really good initially, an increase in personal income, when spread across increased population growth, shows it's often not great news. The numbers reported in the press headlines are aggregates. Aggregate means everybody, the total.
Every worse, since real disposable income declined, this means inflation is hitting people in the pocket book now.
Personal consumption expenditures is the largest part of GDP, currently 70% of GDP is from PCE.
Below is a graph of real PCE, which is adjusted to not reflect inflation or price changes, in order to show the real economic activity versus the gouging at the checkout line and the pump.
The PCE price index increased 0.3%, but minus energy and food increased 0.2%. That's inflation. This implies real disposable income actually decreased, although less than 0.1%. For the year, energy alone has increased 19.6%.
Personal Savings was a 4.9% rate in April, same as March. Personal savings is disposable income minus outlays, or consumption.
On personal income, wages gave a monthly change of 0.4%. Below are wages and salaries for the past decade, on aggregate, not adjusted for inflation. Notice the dip and the more flat line than earlier in the decade. What's wrong with this picture?
Below is personal income minus transfer payments. This graph shows how much personal income increased that wasn't funded by the government. Transfer payments are payment from the government to individuals where no actual services (work) was performed. This includes social security, unemployment insurance, welfare, veterans benefits, Medicaid, Medicare and so on.
Here is what the above numbers do not show, the screw job on the poor, as shown by the spike up in the below graph. By real dollars, personal income minus transfer payments was 0% change for April. Notice real personal income minus transfer payments is below pre-recession levels.