Aggregate consumption drops as income ex-current transfers rises. The pattern of disaggregated consumption pattern suggests tariff-induced front-loading drove some of the support for consumption in December.
Figure 1: Personal consumption expenditures (black, left log scale), income ex-current transfers (red, right log scale), both in bn.Ch.2017$ SAAR. Source: BEA.
Figure 2: Personal consumption expenditures on durables (blue, left log scale), sum of nondurables and services consumption (tan, right log scale), both in bn.Ch.2017$ SAAR. Source: BEA.
Flat services and nondurables consumption suggests (i) declining perceived permanent income (as Friedman defined it), and (ii) heightened uncertainty. However, one should expect smaller effects of uncertainty on services and nondurables than on durables, so I’d stress (i) for services/nondurables.
If we’re hewing to theory, then income less transfers may be the preferable measure. (Social Security is a transfer and is probably seen as permanent, assuming Elon’s apes haven’t frightened people too much.)
If current income constrains spending decisions, as seems likely for the lower half of incomes, then we also want to know what’s happening to total income, including transfers. Much to my surprise, total income is doing better than income excluding transfers. Something has happened since Q1 of 2024 to boost transfers:
https://fred.stlouisfed.org/graph/?g=1Gx5f
As of February, real personal income is up 2.0% y/y, while income excluding transfers is up just 1.1%. The divergence isn’t extreme by historical standards, but the big wash out of transfers since the Covid recovery effort is not driving the data anymore.
Off topic – national security “professionals”:
https://archive.ph/ICiDs#selection-285.0-285.65
Not only do our national security leaders not know (nor apparently care) how secrets should be handled, nor even what is and isn’t secret. It turns out the Secretary of Defense is cribbing off other people’s homework in establishing Pentagon priorities. He just lifted text out of the “Project 2025” monstrosity and sent it out to military staff in an “Interim National Defense Strategic Guidance” document.
Deep thinker. Glad to see he takes his responsibilities seriously. And what the heck, Melania plagiarized Michelle, so that’s what we do now.
The “chat” was what used to be called “talking around the classified”. They were all violating OPSEC!
Separation of powers is for losers:
https://thehill.com/homenews/senate/5224195-grassley-bill-limit-judicial-rulings/
Fortunately, this bill is subject to filibuster. Grassley knows that; he’s is just posturing.
Grassley is too old and dumb to actually understand this bill and its effects. this bill was introduced by a pro-trump staffer. Grassley has no idea what he is doing.
@ baffling. The man has been senile for many years. And even at the height of his mental powers he murdered English language grammar worse than most of my former students in mainland China back in the naughts. He’s a sad joke and as a native Iowan he makes me feel shame.
musk is out on the trail, complaining that people are hurting tesla because of his involvement in doge cuts. that may be true, and it may not be true. but who cares? this is a false argument made by musk. he whines because tesla has fallen nearly in half. but tesla stock is now around the same price as before the election occurred. the runup musk is complaining of losing was probably not legitimate to begin with. why should the stock have doubled in the few months after the election? they are selling less cars than last year, for crying out loud. so don’t listen to the whining by musk, or the parroting of his complaints from fools like bruce hall. crocodile tears. and since i own tesla stock, it is hard to argue that i am trying to hurt tesla. i’m just pointing out unethical and immoral behavior as i see it conducted in our nation today, even if it does hurt my pocketbook.