Still basking in the afterglow of the best report for U.S. growth in a year, economists did not make a big deal out of another report that the Bureau of Economic Analysis released on Friday. The monthly report on personal income, spending, and saving is hardly as sexy as GDP, but it can provide an even better gauge for how Americans might be feeling. If saving and incomes are both up, then they're probably concerned. If incomes are down, then they're probably miserable. The report reveals a rather disturbing fact: inflation-adjusted disposable income per capita is slightly below September 2006 levels.
Check out this sobering chart:
Since July, real disposable incomes have been declining. Although the decline in September was modest, it still helps to explain why consumers are so gloomy: their disposable incomes have been falling over the past three months.
Really, they had been virtually stagnant all year leading up to July too. The income growth we saw from late-2009 through mid-2010 sort of just stopped. Now it has reversed. The September value was the lowest since April 2010. Prior to the recession, disposable income per capita hit and blew past its September 2011 level in September 2006.
In other words, over the past five years Americans, on average, have seen no disposable income growth if you adjust for population and inflation. This also explains why they're spending like it's 2006 -- because they don't have more money to spend. No wonder the recovery continues to feel like a recession: that's an awfully long time to go without a raise.