That’s the title of an article from yesterday. Maybe, but the drop in consumption spending might be. Also, personal income excluding transfers also decline in May…
The recession talk started heating up again on Friday when the personal income data for May hit the news. Total personal income from all sources fell by 0.4% in May from April, the first month-over-month decline since September 2021. Personal income drops during a recession. So a drop in personal income, if persistent, is a worrisome event.
This is total consumer income. It includes wages and salaries, contributions by employers to retirement funds and social insurance, rental income, interest and dividend income, farm and small business income, and personal transfer receipts such as Social Security benefits paid to beneficiaries. In May, this income fell by 0.4% to a seasonally adjusted annual rate (SAAR) of $25.7 trillion.
Ok, insofar as the recent blip. Overall, I’m not sure the author is right. Here’s Economic Confidence (Conference Board) and log consumption to disposable personal income.
Figure 1: Economic confidence (blue, left scale), log consumption to disposable personal income (tan, right scale). Trump 2.0 administration shaded orange. Source: Confidence Board, BEA.
Note the correlation from November onward. In level terms, consumption decreased (see this post).
