February Income at Almost Lowest Level Since Recession Start

In February, real personal income excluding government transfers was 1.8% less than in February, according to the Bureau of Economic Analysis. This leaves real income (seasonally adjusted at an annual rate) just $7 billion, or 0.08%, higher than its lowest level (September 2009) during this recession. Also, the seasonally adjusted annual rate for income has fallen each of the last two months. In contrast to income less government transfers, total real income has grown each of the last four months. This is because government transfers (welfare, Social Security, etc.) are making up a higher percentage (now 18.2% of all income) of reported income each month. The red line on the chart shows real personal income excluding government transfers at the seasonally adjusted annual rate. This clearly shows incomes are stagnating. The black line shows the 12-month rate of change curve. This curve shows that incomes have contracted more slowly each of the last two months. This is a good sign for consumer spending, but it is weakened by the fact that incomes aren’t actually growing.