The BEA Personal Incomes and Outlays Report shows disposable personal income rose by $71.7 billion in May.

That in an inflationary-looking jump of 0.4% percent. But inquiring minds are asking some important questions, like …

Who Got Da Money?

Personal Income Jumps $71.7 Billion: Who Got Da Money?
Category Monthly Increase in Billions of Dollars Percent of Total Increase
Wages and Salaries 6.6 9.21
Employer pension contributions 3.2 4.46
Proprieter’s Income 8.5 11.85
Rental Income 5.5 7.67
Personal Interest and Dividend Income 39.8 55.51
Social Security, Medicare, Medicaid, etc. 3.8 5.30
Alleged Tax Cuts 4.6 6.42
Other -0.3 -0.42
Total 71.7 100.00

When it comes to consumer spending, it’s not the jump in income that matters it’s how that income is distributed. For example, if Bill Gates got all of it, consumers would not spend additional dime without going further into debt.

The numbers are not nearly as bad as my Bill Gates example, but they are not very good.

Wages and salaries were up a miniscule $6.6 billion or .08% (about 1% annualized). One can go a step further and ask “How was that $6.6 billion in wages and salaries distributed?” There is no way to tell, but I bet 80% of that $6.6 billion went to the top 5%.

The headline jump in disposable personal income of 0.4% looks hugely inflationary but the distribution of that jump suggests otherwise.

Mike “Mish” Shedlock