What Recession? Disposable Income Grows

Buried inside today's BEA report on April Personal Income (tables available here, see Table 10) is the statistic that "Real Disposable Personal Income" grew at an annual rate of 1.82% in April 2008 compared to April 2007, the highest rate of growth since December 2007 (see chart above).

This will probably not get a lot of attention from the media, but provides some additional evidence that the U.S. economy is not on the verge of recession, and might in fact actually be moderately healthy.

Comments

[Paul D. Castro, CFA]

Don't you understand that our civilization is coming to an end? Oil and ag commodities are headed to the moon, soon nobody will be able to afford to eat or drive, every homeowner in America is going to default on his/her mortgage and become homeless, Americans have zero net worth and have not saved one cent for their retirements, financial institutions are all going bankrupt, fiat money is better used as toilet paper and we are losing the war on terror!

What is the matter with you!?! Stop bringing this kind of data to our attention and get out there and buy a shotgun, lots of shells and stock up on canned goods for pete's sake.

[Whidbey]

The BEA work is interesting. And,You did not mention that personal savings also showed positive. But we must reserve any celebrations until we see what the Fed does over the next several months. They will be torn by the desire to support the dollar and yet help the homeowners, and Congress will demand nothing less. So we can be hopeful but investors are concerned over the cap gains tax level in the future, and the effects of tax increases on consumers. Just a swallow or is really spring?

[mikeylikesit40]

lmao.

Wow. So, this is actually proof that inflation is finally sinking into the economy.

Income is still not keeping up with inflation but at least wages rose for the first month in a bit instead of going down month after month.

So, let's see.

It costs twice as much for a gallon of milk which chewed up some of my income that I could not then save. Saving rate goes down. Duh.

Hey, my boss finally raised his prices and can afford to give me another $.10/hr. I can finally save that extra $5/wk after gas, milk etc again. You know, like I used to do years ago. Savings rate goes up! Duh.

Let's see a steady trend of rising wages before we get excited. Let's also hope they don't rise too much or you'll see unemployment claims skyrocket and more foreclosures.

Do I need to even mention all the mid-level managers who will be unhappy with their forced second careers making half as much while their expenses stay the same or go up?

We saw this all before... look back to the 80's to see the outcome of the '70s.

[moonbat1775]

"Perception is reality" certainly has a lot of truth in it.
Here is another one "Reality will eventually be perceived".
So, in the short run, know the lies.

But in the long run (in which some of us are not dead, sorry to contradict you, John Maynard) know the truth.

[bearfund]

"Real" anything means nominal whatever adjusted for loss of purchasing power due to monetary inflation and other factors. Understate the latter, and you can make foie gras from the contents of a septic tank. The bottom line is that the federal government has every incentive to understate the effects of the inflationary monetary policies the Fed has been following since the late 1980s and absolutely no checks on its power to do so. These statistics therefore have little to no credibility. When they start acknowledging the cold, hard reality that the cost of living is rising at 7-10% in nominal terms, I'll start paying attention to their "real GDP" and "real income" figures. Until then, I'll give them the same consideration I gave Muhammed Saeed al-Sahaf's pronouncements.

[Common_Denominator]

Has the increase in personal disposable income been adjusted
by inflation rate? If yes which inflation rate? Don't tell me it is the
phony CPI barfed at us by our government!

If the nominal increase is adjusted by "REAL" inflation rate, the
numbers begin to look abysmal.

[TGI NOMOREBUSH]

"not on the verge of recession" ......... LONG PASSED!

[CLH]

More good statistics. Our media which is completely negative gives us nothing but gloom and doom.

Keep up your good articles.

Isn't it wonderful that we have to make fences to keep people OUT. Do the socialist economys need to keep people out?

[Michael Byers]

The tax rebate payments that when out April 28th made up 1.0% of the growth. When you take that into account the numbers do not look as good.

[ed auerbach]

Oh, I love you bears. Ever hear of "climbing a wall of worry" Castro, you make my day!...By the by If things are so bad give us a few specific shorts. Not shotguns, but something we can measure your intelligence by. Me I'm long!! JOYG, SOLF, NE, among others.

[moonbat1775]

“Markets can remain irrational longer than you can remain solvent.” John Maynard Keynes

Too bad central banking has made them so.