Real Recovery with March Income Stagnant?
You may have seen it reported by the Bureau of Economic Analysis and the news media that income was up in March.
Share
Autodesk, Inc.
Featured Content
View MoreDMG MORI - Cincinnati
Featured Content
View MoreECi Software Solutions, Inc.
Featured Content
View MoreTakumi USA
Featured Content
View MoreYou may have seen it reported by the Bureau of Economic Analysis and the news media that income was up in March. While it is true that real personal income was up $22 billion in March compared to February, why income went up is important in determining if we are having a real economic recovery or one courtesy of extreme government spending.
Real personal income is made of actual income and government transfers (welfare, Social Security, unemployment benefits and more). Actual income was up just $2 billion (0.02%) in March compared to February. This means that the remaining $20 billion in increased income in March came from government transfers. Therefore, 91% of the improvement in income in March came from government handouts due to the creation of new money. So, government transfers now make up 18.3% of all reported income in the U.S—basically an all-time high.
Given that actual income is stagnant, it is hard to believe that the improvement that we have seen is a real, durable recovery. In order for the improvement that has taken place in consumer spending and industrial production to be sustainable, there must be improvement in actual incomes, not just income from the government creating new money. Let's hope that future months show more significant improvement in actual income.