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).
I’d love to read a post about employment in industries affected by immigration policies, e.g. employment in agriculture was down about 10% relative to trend in May 2025:
https://fred.stlouisfed.org/series/LNS12034560
While residential construction employment seems unaffected despite anecdotal stories of abandoned construction sites:
https://fred.stlouisfed.org/series/CES2023610001
(However residential construction spending has been trending down)
https://fred.stlouisfed.org/series/TLRESCONS
How is employment counted in these industries? What do we expect from deportation policies and employment in industries where over 20% of labour is undocumented? (knowing that ICE is deported documented migrants too)
We should expect an impact on both GDP and inflation from these immigration policies, but how much and when?
I was going to leave this comment in an earlier post, but it works just as well here.
I don’t think there is any question that there was a slowdown in May. The real question is whether it is more than simple payback for the front-running we saw in March and April?
One series I’ve been paying a lot of attention to is the weekly Redbook retail sales report. During the first quarter, the YoY increase averaged about 5.5%. Then in April and early May it surged to 7%. In the last 4 weeks it has fallen back to about 5%. That’s not enough (yet) to be more than payback for earlier front-running.