Consumption Doesn’t Matter. Income Does.


The BEA reports that consumer spending increased sharply in March. Business owners are pleased:

Consumer spending rose in March at the fastest pace in nearly five years, providing fresh evidence that the U.S. economy gained strength with the arrival of spring. Personal consumption—spending on everything from electricity to sliced bread—surged a seasonally adjusted 0.9% from February, the Commerce Department said Thursday. That was its largest gain since August 2009.

….Paint sales are up from a year ago at Koopman Lumber Inc., a Whitinsville, Mass.-based chain of six hardware and lumber stores. “People are starting to spend some money on their houses. They’re saying, ‘We’ve put it off long enough,’ ” co-owner Tony Brookhouse said. “There are definitely signs of improvement.”

Maybe. But look: consumers can only spend money they have, and the only way for consumer spending to rise steadily is for personal incomes to rise steadily too. But that’s not happening. Here’s the chart since the beginning of the recovery:

There’s a small uptick in February and March, but it’s nothing special. A few months from now, if we’re still seeing a sustained increase in personal income, then we should expect a sustained increase in personal consumption too. But without that, this is just a bit of catch-up spending due to low levels in the previous few months.

Don’t pay attention to consumption. Pay attention to income. That’s what matters. A sustained recovery won’t be based on drawing down savings or cash-out refis or running up the credit card. It will be based on steadily rising incomes. So far we haven’t seen that.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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