Incomes Got Chewed Up by Inflation. Americans Spent Heroically on Goods, But Not on Services. Eviction Moratoriums & Forbearance Implicated

Millions of people didn’t spend on two big services: rent and interest. How spending got skewed in bizarre ways.

By Wolf Richter for WOLF STREET.

Before taking inflation into account, personal income from all sources – from wages, interest, dividends, rental income, transfer payments such as unemployment compensation, stimulus checks, and Social Security benefits, etc. – rose by 0.2% in August from July.

But after taking inflation into account, it’s uglier: Inflation-adjusted – or “real” – personal income fell by 0.2% in August from July, to an annual rate of $17.8 trillion (in 2012 dollars), according to the Bureau of Economic Analysis on Friday.

The spikes in the chart were produced by the three waves of stimulus payments and other piles of funds that were handed out by the government; they created the biggest distortions in consumer income and spending ever. What’s now left behind is the worst bout of inflation in 30 years, that is eating into income:

“Real” personal income without transfer payments fell by 0.3% in August and fell below the pre-pandemic level of February 2020, to an annual rate of $14.17 trillion (in 2012 dollars).

This is personal income from labor, interest, dividends, rental property, etc. but without transfer payments from the government, such as unemployment benefits, stimulus checks, Social Security benefits, welfare benefits, etc.

It should have grown as more people got jobs, and wages increased for many jobs. The green line shows the pre-pandemic trend. It’s tough getting beaten up by the worst bout of inflation in 30 years:

On the spending front:

  • Consumers still spent heroic amounts on goods, but inflation is taking a serious bite out of their “real” spending.
  • “Real” spending on durable goods continues to drop from the stimmie-spike, largely due to auto sales, which plunged in recent months due to the collapse in auto inventories.
  • “Real” spending on nondurable goods ticked up to a record of dizzying magnitude, still powered by working from home, which shifted spending to the supermarket.
  • “Real” spending on services was well below pre-pandemic levels, in part perhaps due to eviction moratoriums and mortgage forbearance; rents and the interest on loans are part of spending on services.

Before inflation, consumer spending jumped 0.8% for the month to an annual rate of $15.9 trillion.

After inflation, consumer spending rose 0.4% for the month, to an annual rate of $14.2 trillion, but only undoing the drop in July, and has remained in the same narrow range since October 2020.

These are still huge amounts that consumers spent, and consumers are still flush with money from the myriad of pandemic-era fiscal and monetary stimulus, from forgivable PPP loans to stock market gains, and they’re still spending bravely. The green line shows the pre-pandemic trend. It’s tough to outspend this type of inflation:

“Real” spending on durable goods dropped another 1.3% in August from July, the fifth month in a row of declines from the breath-taking stimmie-inflated levels in March and April. But spending levels, even after inflation, remain far above the pre-pandemic levels (green line).

A big contributor to the drop in durable goods spending is the plunge in spending on new vehicles in recent months, as inventories on dealer lots have collapsed and there isn’t much left to spend your money on (more in a moment):

Auto sales normally account for over 20% of total retail sales and dominate spending on durable goods. But new vehicle sales plunged 23% in August compared to August 2019, as dealers ran out of inventory. Auto dealers jacked up their prices in response, and people jostled for position and paid over sticker to score popular trucks and SUVs:

“Real” spending on nondurable goods jumped by 1.7% in August from July to a new record annual rate of $3.41 trillion (in 2012 dollars), a heroically high amount and far above the pre-pandemic trend line (green). This category is dominated by food and energy, including gasoline, but also includes household goods of the type sold in supermarkets that were among the winners of the shift to working from home:

“Real” spending on services ticked up 0.3% for the month but remains 2.2% below February 2020, and far below the pre-pandemic trend line (green). At an annual rate of $8.35 trillion (in 2012 dollars), real spending on services is where it had first been in June 2018.

Services accounted for only 61% of total spending in August; before the pandemic, it accounted for about 65% of total spending. During the pandemic, spending shifted from certain types of services (such as travel and entertainment events and healthcare) to goods.

Rents and the interest portion of loan payments also fall into this category of spending on services. Given that the eviction moratoriums were still in place in August, and that 1.6 million mortgages were still in forbearance at the end of August, and that $1.6 trillion in student loans were still in forbearance, part of the decline in spending on services was caused by many consumers not making their rent and loan payments.

This situation with unpaid rents and interest is an example of how the massive and wide-ranging pandemic-era programs have side effects that skew spending in bizarre ways.

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  144 comments for “Incomes Got Chewed Up by Inflation. Americans Spent Heroically on Goods, But Not on Services. Eviction Moratoriums & Forbearance Implicated

  1. otishertz says:

    That spike in income in a time of unprecedented unemployment was almost entirely transfer payments (unless you were a billionaire or supranational tech propagandist).

    The chart minus transfer payments is telling in contrast with the others. As is the one on durable goods purchases.

    How many who bought a new washer and dryer with their stimulating checks are going to need a new washer/dryer in the next 8 years?

    There is a vacuum in demand forming.

    • Coffee says:

      Same issue with the “Cash for Clunkers” program, where future demand for vehicles was pulled to the present.

      But that program was limited to vehicles. This time around, demand for ALL types of goods were pulled to the present.

      I feel we may be good on stuff for several years…

      • Anthony A. says:

        “I feel we may be good on stuff for several years…”

        I know we are….

        Between my daughter’s family and us two old retirees, we are good with cars, home appliances, and electronic goodies for several years. We made it a point to replace two old cars with a basic, small SUVs (Hyundai Tuscons), changed out two almost 20 year old water heaters, and a few old TV’s. We did most of this spending between October 2020 and February 2021. We paid cash for all of this.

        Daughter and her husband are savers and watch their money. I guess she got that from dear old Dad.

        • Joe Saba says:

          I got similar comment when I ordered cabinets for an apartment.
          said they weren’t AS BUSY – but they still have people waiting

          can only hope all this FAKE demand ceases and then supply will settle down
          can’t wait for easter sale of XMAS stuff when it finally gets delivered
          we’re just now seeing increased income – ie HIGHER RENTS
          and I DO NOT HESITATE to evict now – immediate NO SYMPATHY to deadbeats

        • Old School says:

          The sad thing is if you and your family don’t borrow and spend the government is going to borrow and spend for you.

          Plus government has made it so hard to be a long term investor. Who can know how long government will continue to juice economy with negative real rates and printed money.

        • COWG says:


          2 savers… you got a chance

          1 saver/ 1 spender… depends on who dominates …

          2 spenders… just head on down to divorce court…

          I’m like you, though… spending now to upgrade infrastructure for the long term… I like where I’m at right now but will be looking for the opportunities if they arise… if they don’t… meh…

          If anybody is interested, just paid $3600 for about 200 ft of chainlink plus two 5 ft gates… from a quality professional company, not the jack leg, fly by nighters…

        • Dave Chapman says:

          Right. I replaced two hot water heaters.
          “Buy it now, while you still can.”

        • argo nut says:

          @Joe Saba. Nothing more deadbeat than petit-rentiers. Parasitic bottom-feeders the lot of them.

    • RH says:

      Yes. Demand from ordinary Americans is bound to drop. However, the ongoing, self-inflicted, suicidal boycott of Australian coal and other products by the CCP, with resulting intermittent power cuts preventing Chinese factories from producing goods, is also dramatically reducing production. Thus, prices may not drop as the Weed claims, particularly with the banksters’ continuing to print dollars via their “Federal” Reserve to funnel to their banks, etc.

      Income from capital:
      Aside from the income derived primarily from labor, there is the income from capital. Most charts do not account for the fact that the rich have acquired massive amounts of often technically unrealized income via the massive increases in their wealth during the last decade. They have even avoided equivalent taxation, not even considering their foreign income, upon which they have not had to pay taxes until (if ever) they bring it back to the USA formally (as opposed to “returning” it to the USA via foreign tax shelters which entities then can invest in the USA without the rich being considered to have brought their foreign income to the USA(!), which the billionaires formed in low-tax, tax havens in poorer countries, in which they have to pay little or zero taxes of any kind.)

      See “Taxation of Earned vs. Unearned Income” in bea d o t g o v. Therefore, there may be continued, high demand for the luxury goods loved by the rich: luxury cars, luxurious mansions, planes, yachts, illegal drugs, jewelry, prostitutes, etc. Of course, if they are forced to finally pay a fair share of taxes like ordinary Americans as recently proposed, that demand may change.

    • Toksuri1 says:

      Considering quality of appliances nowadays, could be sooner than you’d think

  2. J says:

    Something I don’t get, why are u shorting the market when u think that inflation won’t be transitory?

    • Wolf Richter says:

      That’s the theory: High enough inflation means that the Fed will end QE (happening), will reduce its assets (starting maybe in 2022), which means much higher long-term yields and withdrawing liquidity, and will raise short-term interest rates (starting likely in 2022 also). All of them are bad for the stock market. And the stock market will eventually see this coming and is likely to react in anticipation. I was just a little (= half an eternity) early :-]

      • J says:

        Should this already be factored in with the recent fed announcements? Further, inflation is not caused merely by QE and there are supply chain issues as well. It does not necessarily mean that ending QE will stop the inflation. So, if inflation still persists, what’s the point of holding any cash?

        • Old School says:

          As counter intuitive as it might sound inflation can be riskier for stocks, long term bonds and housing than cash.

          If inflation expectations jump to 10% there will be a revaluation of all three assets. Stock PE’s could get chopped to 6 or 7 if history is any guide so that’s a 75% or so loss. Long term bonds could loose nearly all value. Real Estate is a bit more difficult to predict, but in times of economic stress housing can be hard to sell if you can’t ride out storm. You got to have some cash, at least enough to weather a storm

        • historicus says:

          Inflation, unaddressed, is bullish for assets.
          Inflation, addressed, is bearish for assets…for to address it is to change the interest rate environment.
          So, because we do not have FREE MARKET, we must wait for an unelected elite group of monetary dictators to decide…
          And they will tip off their friends (note the two recent departures from the Board) first.

        • Wolf Richter says:


          “Further, inflation is not caused merely by QE and there are supply chain issues as well.”

          I’ll repeat it for the umpteenth time: Look at the horrendous spike in spending on durable and nondurable goods (even adjusted for inflation). That sudden demand triggered the supply chain issues; and that demand was the result of monetary stimulus (QE and 0%) and fiscal stimulus — $9 trillion in total!! So QE and other stimulus CAUSED the supply chain issues. This is the most grotesquely overstimulated economy ever, and no supply chain would be ready to deal with it.

        • economicminor says:

          If you hold cash and inflation eats up 5%/yr you still have the cash..

          If the markets crash you could lose upwards of 50% or more of your asset value. The Big Ones 70% and took more than 20 years to recover.

          Holding real estate has holding costs and if you went in leveraged, you could not only lose All your asset value but have to pay taxes, insurance and maintenance to boot.

          When multiple bubbles POP, what is the smartest holding? What will go down the least?

          So the real question is “Do You Believe in Forever Bubbles?”

      • COWG says:

        You weren’t early…

        You got sucker punched…

      • Jon says:

        All these are bad for all asset markets including real estate

      • RH says:

        As discussed in “Britain’s Second Empire: The Spider’s Web,” the ultra rich of the City of London control trillions of dollars. I believe that they control many times the less than $100 trillion dollars (adjusted for inflation since then) mentioned in that excellent documentary. They have apparently owned the banks that control the “Federal” Reserve’s district banks and thereby the FOMC, indirectly, for at least a century.

        The appointed, junior banksters that theoretically run the “Fed” are surely terrified of displeasing them. After all, one phone call and those appointed banksters could be disappeared by the criminals being helped by their truly wealthy and powerful leaders. See “Money laundering, oligarchs, terrorists: How corrupt are the banks?” in DW. See “The Panama Papers” in the occrp site.

        Hence, while I do believe that a stock market collapse is inevitable, I would not have the courage to short the market. The banksters and Wall Streeters, including those from the City of London (which is trying to get a favorable, UK-US trade deal now with the USA to better perpetrate its shenanigans here) have too much dry powder. Their “Federal” Reserve is too much of a goose that lays golden eggs for them to risk its loss. I suspect that they can manipulate the market to stay high (particularly with inflation) for a significant while longer.

        • Trailer Trash says:

          “Money laundering, oligarchs, terrorists: How corrupt are the banks?”

          I got bored so I didn’t listen to the whole 25 minute audio file. My impression is that the journalists beat around the bush instead of coming straight at it regarding why the banks get away with massive corruption:

          The people who control the banks own the politicians and the “justice” systems.

        • RH says:

          Beautifully succinct summary, Trailer trash. I would also not be surprised if recalcitrant, US politicians that reject bribes are blackmailed into complying with what the banksters-gangsters want. That is what I heard happens in Columbia and Italy.

        • Wisoot says:

          (September 7, 2021 – September 25, 2022) is a Shemitah year. The Shemitah year waives all outstanding debts between Jewish debtors and creditors. Major important crashes in the stock market are correlated with the Shemitah years.

      • Jesse says:

        I’m 31 years old. I watched the last bubble pop and it has made me an extreme bear. I just sold a mobile home in Cali for 729k 100% more then I paid 2 years ago cash. Now living in this duplex I got in 2018. I’m in a good position for my age with lots of
        Cash and this duplex, but what am I supposed to do? Buy at these outrageous prices as I was laughing to the bank. This duplex not big enough for me to stay in for years. And my income is about to change for the worse…Very confused on what to do now! At least I live in Lake Tahoe for 500 bucks a month lol

        • elysianfield says:

          “Very confused on what to do now! At least I live in Lake Tahoe for 500 bucks a”

          Do what the country is now doing…take your assets, go into a local casino, the roulette table, and put it all on the black.

      • Poor like you says:

        The big market crash has been a month away for five years, haha.

      • Sceptic123 says:

        Block chain all banking, gov,t puts itself into forebearance,introduce govcoin,now we all have skin in the game. What do you think?

    • otishertz says:

      Why do U rite like U are 11 and held back a few years?

  3. Seneca’s Cliff says:

    I think the current regime ( which includes the Fed) is so clueless that they might have another cash for clunkers program, then after they have taken the trade-in’s and crushed millions of drivable cars they will realize there are no new or used cars for the tradees to buy.

    • Thomas Roberts says:

      They say history doesn’t repeat itself, but it rhymes. We probably won’t have another cash for clunkers, but we will have some other old program repackaged for another industry. I have no idea, what that would be. Maybe it’s better to not give them ideas.

      • Old School says:

        I am beginning to believe this thing about a generation must die out before you repeat financial catastrophe.

        Take Germany. The country has been extremely cautious of money printing, because old people have seen savings destroyed by it in the past.

        In US, we are getting close to 50 years since inflation was a problem. Obviously society isn’t afraid of inflation any more or there would be political pressure to stop the printing and spending.

        • COWG says:


          Possibly, however, I think it’s more due to the fact of offshoring manufacturing and the change over to a services and consumption economy which held down in your face inflation..

          Along with low energy costs…

          People were too drunk and giddy over their stock portfolio to pay attention…

          Too busy looking over their shoulder while patting themselves on the back…

        • 91B20 1stCav (AUS) says:

          OS/Cowg-don’t forget to add the heavily-popped smoke of waay too-much easy consumer credit since the ’70’s. (…wages not rising? that’s okay, we’ll just live high on the never-never since savings have been shown to only be for suckers, anyway…).

          may we all find a better day.

      • Paulo says:


        New version will be Heat Pumps for ________
        Solar Panels just because……including EV subsidies, etc.

        Then there will be the industry that evaluates whether you are eligible for whatever.

        • Harvey Mushman says:

          Why are you mentioning Heat Pumps?

        • Thomas Roberts says:

          Heat pumps are air conditioners that also work in reverse. Rather than actually creating heat, you simply pump it in from outside. It’s more efficient than normal furnaces, because most aren’t strong enough to fully replace a furnace when temperature near zero, you still need both in most areas (most people don’t know this, so I’m describing them). It’s makes a lot of sense to subsidize them. It’s always a question of who should get, how much though. Solar panels are alot more iffy.

          The issue with cash for clunkers was that it removed a huge part of the used car market, making those less well off pay more. It also hugely overpaid a bunch of people for their old cars. It boosted the prices for the entire used car market.

        • VintageVNvet says:

          Re: Heat Pumps:
          While HPs ARE very efficient in the middle range of temperatures as said above, they are NOT so efficient when Either Extreme temps occur, and especially when those extremes occur frequently.
          They also have a tendency to freeze up completely in especially hot and humid conditions, and sometimes will not work at all for many hours; been there, done that, and sweated through some critical deadlines, and even lost temp sensitive electronic/digital based devices.
          Do not recommend where temps consistently above 95 degrees!
          Course do not recommend living in such places either, and wish many of the recent arrivals would go home,,, LOL – never going to happen, eh AA

        • Wolf Richter says:


          I had a big heat pump on the balcony of my 23rd floor 1,800 sqft condo in Tulsa, with a wall of glass and glass-doors facing west, which picked up ALL the afternoon sun. And it gets really hot in Tulsa in the summer. So the heat pump had to deal with it, and did just fine.

          But during cold days, the supplemental electric heater that most/all heat pumps come with kicked in because it couldn’t extract enough usable heat from below-freezing temps in the outside air. The heater portion worked very efficiently until about 50 degrees outside. Any colder, and you’re heating with an electric heating coil.

    • Mendocino Coast says:

      They Never stopped the BAR Veichael ritiement Program
      I know because I retired cars . They Pay $1,500 to$1,000 depending on your income Ect . The program is Very liberal
      and simple . The Car must still Run and move But if it runs bad that’s ok If its wrecked ok if it does not pass smog thats good .
      you can look it up online :,to%20retire%20their%20vehicle%20at%20a%20BAR-contracted%20dismantler.

    • El Katz says:


      Cash for Clunkers did nothing more than punish the low income people who could not afford a new car. It took thousands of serviceable vehicles off the market that could have been purchased and repaired (if necessary) and provided a few years of transportation for those folks. It also removed a lot of inventory from “pick a part” lots where people could find used parts for their existing vehicles if they weren’t lucky enough to be able to afford taking advantage of the program. Used car vehicles spiked and the used parts followed suit.

      I can’t begin to tell you the amount of fraud that occurred during that period of time or when CA offered a trade in voucher. People would buy a Craigslist beater for a few hundred $ and then trade it in under C4C (or the CA program).

      IIRC, one of the requirements for C4C was to destroy the engine (or crush or shred the body)…. which left most of the other engine and mechanical components serviceable if you were smart about how you removed them (drop the subframe). All you had to do was punch a hole in the short block, photograph it, then pull the engine, replace the short block with a used one, reinstall, and off to the races you went. As long as no one attempted to use C4C on the rebuilt car, you were golden. The engines had to be removed anyway in order to crush or shred the vehicle as castings aren’t kind to the machinery.

      Bureaucrats are lousy at designing programs…. they leave loopholes in them large enough for Ray Charles to have found them.

    • Auldyin says:

      I clunked a beautiful 2000 Nissan Almera saloon in 2010 and I can swear I saw it in news footage of the Kabul exit.

  4. Maximus Minimus says:

    You can beat inflation by buying necessities ahead of time, but the tithes will go up, and will have to be paid.

    • 2banana says:

      I am storing gasoline in plastic bags…

      In the basement.

      • Joe Saba says:

        boom boom – out go the lights

      • George says:


      • Anthony A. says:

        Add some Sta-Bil to the bags. Makes the gasoline good for several years. It can still go BOOM though!

      • Ron says:

        Idiot in right condition it could blow up a city block but they won’t find u nothing left

        • El Katz says:

          Ron doesn’t do well with sarcasm. Maybe it’s time we all mark sarcasm with a “/s” to alert them.

        • Wolf Richter says:

          Yes, we had a couple of cases of this phenomenon here today. I should come up with a big red flashing button that says in WOLF STREET Extra Bold Stencil font: “Mind the Sarc.”

          I’ve stepped into it too, as our dear commenters never fail to point out. When you’re going fast, it’s easy to do. And sometimes it’s pretty subtle. Keeps you on your toes. And missing the sarc always provides some humor for the innocent bystanders.

    • otishertz says:

      I’m aging cheese

      • COWG says:


        Both of you guys are way smarter than me…

      • El Katz says:


        Better than “cutting the cheese”. /s

      • 91B20 1stCav (AUS) says:

        otis-when asked ‘…how are you…’, i often reply ‘…aging like a fine cheese-fragrant with a bit of mold on the outside…’. (…i do presume you are aging ACTUAL cheese, though…).

        may we all find a better day.

  5. 2banana says:

    California will allow evictions again starting today – October 1st.

    “Rents and the interest portion of loan payments also fall into this category of spending on services. Given that the eviction moratoriums were still in place in August, and that 1.6 million mortgages were still in forbearance at the end of August, and that $1.6 trillion in student loans were still in forbearance, part of the decline in spending on services was caused by many consumers not making their rent and loan payments.”

    • otishertz says:

      Are there any reliable estimates on how many millions of renters had stopped paying rent?

      Does anyone think these grifters will not get evicted in any way possible regardless of the landlord getting made 80% whole?

      I don’t want to even think about the scale of the coming tent cities around kookytown pdx in about ten months.

      • Thomas Roberts says:

        The eviction courts in many cities will be backed up for months. Many landlords will probably not fight them for unpaid rent, if the unpaying renter agrees to just move out, they will have to move somewhere though. I’m guessing at least some people will have unofficial roommates.

        I don’t expect much tent cities to result from it all.

        I do expect the vast majority of unpaying renters to get away with it and come out ahead. This has damaged the entire rental market across the country; this is resulting in less houses being available, many properties changing ownership (this often leads to rent price increases), other rent increases, and bigger landlords becoming a bigger part of the marketshare (likely to happen later on). As well as the obvious damage to landlords.

        • otishertz says:

          From what I have read, grifter renters can get 80% of their accumulated delinquent rent forgiven and paid with federal health scare funds if the landlord agrees to forgive 20%.

          Problem is property owners then have to make a deal with renters who has screwed them over a protracted period of time. I’d take that deal as a landlord in that situation and kick them to the curb as soon as possible.

          To think that the end of the free rent moratorium will not increase homelessness is a total failure of imagination.

        • otishertz says:

          I just hope that the ex post facto free rent windfall for grifters will be subject to income taxes like any other forgiven debt.

        • historicus says:

          unpaying renters
          record job openings
          square that

        • David Hall says:

          The mortgage delinquency rate is 4% (Black Knight Inc.)

          Foreclosure activity is rising.

          Rental vacancy rates decreased. Not much completed new home inventory available either.

          Federal subsidized flood insurance premiums are expected to rise for some homeowners after years of insurance deficits.

        • Robert Hughes says:

          Do you really think that a landlord will not question, obtain info on rental history before renting. All or most of those who didn’t pay and get evicted will find their choice has consequences, many of which they did not expect or could recon with. There is really no free lunch

        • SocalJim says:

          Robert Hughes,

          Landlords are often looking at a pile of applications. Often, renters have a few credit strikes on them. That is why they are renters.

          So, you have to pick through that pile and pick your poison. Then, you really hope you get those rent checks.

          Many are getting out of the rental business because they expect it will happen again … renters stay for free. Landords left are jacking up rents.

        • Thomas Roberts says:

          Robert Hughes,

          Those unpaying renters can claim they lived with their relatives, because of pandemic concerns or the such. There are alot of potential excuses.

          I absolutely think most will get away with it. I’m not saying this is a good thing. Also most aren’t even going to make use any of free programs.

          Most aren’t going to be taken to court. It will vary greatly by city. In most cities they will just shuffle around. In some cities on the coasts, there might be a bunch of people refusing to leave until fully evicted, which might take awhile.

          The issue is that landlords have to take them to court and even if told they have to pay back rent, most landlords will never receive that money. It’s always worked that way in most states. It’s just not worth the effort for most landlords and if you can tell unpaying renters, get out and i won’t chase you for unpaid money, most will take it and it will be the default way to handle it in most places. Temporarily, some of these people might be unofficial roommates with random people they know.

      • Old School says:

        I think we are really getting a culture in the US that we can consume without producing.

        We also have a head in the sands approach that production is bad and dirty, but we like to hit the buy button on the phone and have stuff show up on our door in two days. ESG and all so we can feel good about ourselves.

        • Bobber says:

          For a long time, it was a tug of war between business owners and labor, fighting over the benefits of higher productivity and production increased. Now, funny money has been introduced. We don’t need to be a business owner or laborer. We can print money and buy stuff from foreigners!!!!

          We’ll have to go back to work some day, when foreigners realize they’ve been duped.

        • Thomas Roberts says:

          Despite the claims, the bulk of stuff and services consumed in America, is made in America. The bulk of the infrastructure and houses in America, is predominantly American made. America also exports as well. Food, gasoline and car stuff, energy, and most stuff you don’t think about is American made as well. Right now, there is just too much imported general store stuff.

          For quite awhile, every group in America has been trying to live above their means and skew everything.

          There are quite a lot of economic issues that have built up in America over time.

          Alot of the issues result from the number of hours worked in a week not being forced downwards over time as productivity increased massively. Right now, about half of the jobs could be eliminated, less if we bring some of lost manufacturing back. It doesn’t make sense to bring most manufacturing back.

          Because there are so many useless jobs, most workers can be replaced too easily to have bargaining power. In general, there is alot of wasted effort.

          If people worked less and got paid more fairly, there would be less people trying to not work at all.

          Nothing is likely to happen until the everything bubble pops.

  6. MM says:

    Thanks for the nice update, Wolf.
    Where does one find the detained BEA info relating to household income w/ and w/out transfers? I couldn’t find it at the links I read article.
    Another Econ observer and blogger I follow has recently been developing the argument that we are setting ourselves up for a traditional inventory led economic downturn. I find his arguments more and more convincing as time continues.
    It is also interesting to note that all the trillions of stimulus so far seems to have no multiplier effect.

    • Wolf Richter says:


      If stuck, try googling it. Something like this works: Real personal income excluding current transfer

    • Old School says:

      It might not be as simple as I think, but I believe the French experiment with printing money in the 1700s is all you need to know. Printing causes short term economic activity and then affect runs out. Government does more printing. Ends in economic collapse.

      • Bobber says:

        In that example, a group of greedy wealthy rentiers got their heads cut off. Ironically, they were highly successful in accelerating production, wealth accumulation, as well as “other” events (i.e., death).

  7. Cobalt Programmer says:

    Anyone expecting a correction, crash, recession or depression will be disappointed for the following reasons.

    1. QE did not existed this long before 2010. QE is the biggest armor against any economic downside. The taper will not happen. Just trust me.
    2. Reverse Repos
    3. The debt ceiling will be raised again and again and for ever after
    4. The handouts to all the people stimulus cheques from president
    5. Fed can directly send money to us all in future. This will happen in the future. not today.
    6. Eviction moratorium policy
    7. WFH lifestyle. This is very difficult to explain but will be with us forever after.
    8. You will own nothing but be happy…cc

    • MonkeyBusiness says:

      News Flash!!! ‘Biggest crash in world history’: Personal finance expert Robert Kiyosaki predicts economic crisis in October.

      For anyone who didn’t know this already, Robert K first became famous for his book Rich Dad Poor Dad. With a title like that, he can’t be wrong right???

      I think I am going to sell my farm and short the entire stock market come Monday. Who’s with me???

      • Island Teal says:

        Robert wrote another book on the subject of Fake news,fake money,fake teachers,etc.. A good read👍👍

        • COWG says:

          I haven’t finished the one on fake boobs yet…

          It’s taking me a while…. Lotsa pictures…

      • LK says:

        Michael Burry throwing fits and sputters too. Big Short guy, for the uninitiated.

      • roddy6667 says:

        Robert K started out in Amway. He was a big shot there. I question his honesty and motives because of this.

        • MonkeyBusiness says:

          Takes a con man to recognize a con!!!

          Well it’s like anything else right? Only use the money that you can afford to lose. I don’t have a farm to sell, but I did initiate a short position last week, so yeah I managed to catch the “correction”.

    • Depth Charge says:

      Methinks you need to read up on Weimar Republic. There’s no such thing as printing to prosperity. Why are there so many people who sound like they’re on crack?

      • Cobalt Programmer says:

        I will give everyone broad reply.

        1. if I invested in the market everyone predicted about the economic crises, I would be a millionaire already.
        2. The other website ZH made so many predictions since 2012. I am still waiting.
        3. The big shots like Robert kiyosaki or Micheal Barry made lot of money in the last ten years by going long on the market. They are good investors who bet both short and long on equities and other instruments. Long with a hedge.
        4. Wiemar Republic happened because no body wanted German Mark. Dollars can be exported to other countries for goods and services. World is hungry for dollars.
        5. I am not excluding an economic crises. Yes, it can happen this year or march 2022 or August 2023. But the downside will be short and Pain will be bearable. We have economic medical kits.
        6. There were no Engels, his comments were our collective Hallucination. We are living in a simulation.

        • Old School says:

          Government can not or will not pay it’s debt with positive yielding money. Therefore it is soft defaulting or running a semi Ponzi scheme.

          What would happen if government had to hold debt at current $28T and fund itself legitimately. It could not without economic collapse. I there conclude we are living in temporary fantasy land.

          It is starting to hurt a little with inflation, but standard of living has probably peaked for middle class.

        • otishertz says:

          You are no Micheal Engel, my friend.

        • COWG says:

          Don’t make me guess…

          Are you talking up to me or down to me?

          It matters so I can understand the context of your post…

        • Jon says:

          I agree 100 percent with you
          Anyone heeding to ZH w.r.t investmnt would have lost big time on gains in the last 10 years or so.

          All the smart guys are making right analysis but they are under estimating the power of government intervention

          I don’t see any crash coming anytime soon
          If it comes then btfd

          I am very invested bear
          Can’t afford to sit on the sidelines

        • ru82 says:

          ZH can spin a good report into a doom and gloom. I would read a post and go wow…that sounds bad. Then I would go to the source of their info. Then I would read the source and say….this is very bullish.

          i.e. Lets say ZH would say homes sales have cratered and blah…blah…blah to make you think the peak is in, Then you read the article and it is because inventory is low and this will actually cause prices to go up.

        • Trailer Trash says:

          To Cobalt:

          7. Wiemar inflation was caused by WWI borrowing for war (just like Uncle Sam) then reparations that had to be paid in foreign currencies purchased with paper currency.

          8. Eventually importers to US will not want US dollars. That is when inflation turns into hyperinflation for us, too.

        • Wolf Richter says:

          Trailer Trash,

          If there is one small and otherwise inconsequential town in the world that everyone interested in inflation has to know how to spell, it’s “Weimar.” E before I. Pronounced why-mar :-]

    • Paulo says:

      Your list is certainly true, Cobalt, but I have a general question.

      Why has it been okay in the past to pay farmers not to plant, or sudsidise what they do plant, mandate ethanol in gas, build military bases in the correct states, pay for their $300 hammers, but not okay to shovel cash to individuals? It’s all the same as far as I’m concerned and happens in every country.

      If this was a Sopranos episode it would be the one about contracting for ‘no shows’ on a building site.

      I still believe the frugal and focused will always have a chance to get ahead despite the Govt shenanigans with other peoples money.

    • Lisa_Hooker says:

      No. You will still scramble to own stuff – but you won’t be very successful or accumulate much. Accumulation will still primarily depend on luck and inheritance. You won’t be any happier than you are now, possibly less happy, except when you …. Not much will change until there is a universally accepted scoring methodology for proving who is the most happy. Competition won’t go away.

    • MCH says:

      The Fed just needs to be disbanded at this point and members tossed in jail.

      The vice chair apparently traded a bunch before Powell’s emergency announcement on rates last year. But don’t worry it’s all on the up and up, preplanned trade and such. And look the news is coming out on a weekend.


      It might be time for another Rick Santelli movement…. Include the a**holes in Congress this time, limit the f***ers and their immediate families to investments in US treasuries only, and conduct regular forensic audits of their accounts up to a decade after they leave office. Start with Nancy and go down the list, spare no one in Congress, not the elected ones or their staff. Oh and term limit the bozos.

      Although I doubt that would be possible with the current media BS.

      • When they start grilling Powell over insider trading the wheels will come off the market.

        • Jon says:

          These people are seasoned liar and know how to answer and deflect tough questions
          Also the people who should question themselves are involved big time on insider trading

          Worst case they may he fired but can keep their money

          Ideally they should be put behind the bars for years and all their money taken away

          Bottonline don’t expect any changes

        • MCH says:

          Who is going to grill Powell or any of those liars on this stuff? Congress? AOC? Mitch McConnell? Rand Paul? Ok, may be Paul but I doubt it.

        • Depth Charge says:

          NOBODY is going to grill Powell or anybody else, but they ARE going to start snooping around your bank accounts at ANY transaction over $600. And they’ll freeze your account and haul your asz off to jail if they want.

    • economicminor says:

      I’d say that before you deny possible / probable market crashing you should familiarize yourself with Dr Lacy Hunt’s work. He’s done some recent interviews on youtube..

      Dr Hunt, says Debt is an increase in current spending in exchange for a decrease in future spending unless that debt creates an income stream adequate to repay the debt, interest, plus a small profit. Borrowing for consumption is a hole that will have to eventually be refilled with future savings. The bigger the hole, the longer the period of austerity.

      In other words, there really is No Free Lunches! Someone always has to pay.

  8. drifterprof says:

    DXY has been trending pretty strongly up since May. So someone is liking the seemingly inflation-bloated future of USD.

  9. Transfer payments are reverse taxation and inflation is a tax. It’s a wash, unless you wonder how the government plan’s to balance the books.

    • Old School says:

      It’s very corrosive for society though. When you have politicians stealing from one group to give to another group, people get upset.

      • historicus says:

        Most dont know its happening….the THEFT.

        I hope they wake up some day.

      • Jon says:

        Most of the people have no clue what’s happening at all
        People are upset but not at the politicians
        Even if they are upset at the politicians they have no way to express it in proper ways

        In usa only one party rules .. the party of elites and rich
        Democracy and Republicans take turns to put a show that they are ruling

        Unless people wake up from their slumber and pick up axes and hoes… nothing would change

        I don’t see anything changing

      • roddy6667 says:

        Isn’t that what politicians do best?

  10. joe in LA says:

    It’s obvious that the January 6 crowd has no idea what the Federal Reserve is, or how any of this works — or they would have burned the Eccles building to the ground.

    In the meantime, the Fed is well into the mopping up phase of its war on the former middle class — just shooting the stragglers now.

    • historicus says:

      The occupy Wall Street movement was a few doors away ftom being on target (NY Fed)

  11. AdamSmith says:

    Have started small businesses a few times.
    Neighbor works for a big company in the pet industry.
    Said a meeting was held due to lull in business…. I don’t think it is a lull.
    For obvious reasons many small businesses are now going to suffer and die.
    Many bigger chains can get special pricing on products and they will use these to eliminate the small local businesses that compete.
    Am seeing it happen already with one small business down and one more to go then it will be a national chain Tractor Supply against a regional chain Kahoots feed.
    Lots of bootleg hay farms/ranches are popping up with truck drivers who haul hay which increases difficulty for small businesses who pay taxes.

    • Lisa says:

      Small businesses will be crushed unless they sell something no one has

      • JayLah says:

        My father owned a convenient store that I helped out at until this last July. He has owned it since the 90’s and we were a staple of the community. Unfortunately (not for him though), my father sold the business because he received an offer too great to refuse (potential buyers making offers endlessly over the last year). The numbers looked amazing this last year, 25% growth in sales, profit margins went up due to customers purchasing tons of junk that was usually reserved for pay day (imagine fancy torch lighters, rick and morty ash trays, Mike Tyson Blunt Wraps and Cones and rolling trays, and a fan favorite viagara infused honey, yes its legal and yes it has the same active ingredient, search Royal Honey VIP or Black Bull Honey) .

        Every Tuesday, when the unemployment checks were deposited there would be a run on our atm, (notching a beautiful 2.50 a transaction). However, the greatest increase in revenue in the store was. the lottery. We were on track for over a million (revenue, 5.5% profit + 1% cashing) this year. Gambling is a favorite even when the bills have yet to be paid. The expansion and increase in ebt was also a huge driver of revenue. Customers had so much money on their ebt cards they bought us out on candy bars, frozen food, beef sticks, (really any food items at 35-45% profit) etc. Let’s just say these people were not of the saving mindset which is a shame. Dumping money onto people will not lead to long term prosperity, it only takes a second to notice. Half of my customers created fake llc’s and applied for business loans with no intention of paying them back. There was even a guy who operated a business setting up people for the fraudulent applications and applying for loans for them (of course taking a heft fee, but who cares MONEY).

        Infaltion was extremely evident over the last year, cigarettes incurred 4 price hikes over the last 4 qaurters. A pack of newports was 7.50 last year and is currently 8.40. No complaints from all of my customers flush with cash. Honey buns actually went down in price, .59 to .5, too bad the size also went down by half. Cigars that have been pre packaged 2 for 1, now 2 for 1.29. It took them 10+ years to break that one. Still not a peep from my usually penny pinching customers. I think my dad made the right choice because there is no way this can last. When tougher times come and the helicopter money runs out, the prices won’t be going back down. They never do! The new owners are experienced, they’ve boughten stores from friends and family of mine over the last 10 years as they expand. I suspect they know they are overpaying but are OK with it. They must not care because one or two more years of this nonsense and they’ll have made off well enough to withstand the next 10-15.

        • 91B20 1stCav (AUS) says:

          JayLah-good to hear from someone from the front lines of retail.

          “…a barber can’t make a livin’ off a man who won’t be shaved, and a preacher can’t make a livin’ off a man who won’t be saved, he might accept your welfare but he’ll walk right o’er your grave, goin’ nowhere…”
          -michael martin murphey- ‘goin’

          may we all find a better day.

        • ru82 says:

          Thanks for this posts. Very informative.

          Also…I notice Gatorade and Poweraid bottles shrunk from 32oz to 20oz a few months ago

  12. George Wood says:

    I interviewed with a Fedex outfit this week.

    I asked if their package counts were down and the answer was no, granted this is Utah. They pay $1.00 per delivery which they can do, as unlike Amazon they are operating a for profit business.

    Amazon is pushing for 300 package deliveries per day and my DSP has been been diligently requiring us to return promptly after completing our 10 Hr. shift, often bringing back multiple packages. My current DSP won’t last long.

    Route size has increased dramatically. Package counts fluctuate with the stimulus money. Amazon is getting desperate. Delivering unprofitable junk for free is never going to be profitable.

    Notice your package deliveries are not always the next day anymore? One stop now usually means delivering to 3 – 4 or even 5 houses. Amazon is staggering deliveries in a vain attempt to reduce delivery costs.

    • K-Agri says:

      Very interesting George! I recall seeing one or two of your comments on the delivery/courier industry in the past and always appreciate them. It gives you a very interested view point on the economy!

  13. Mendocino Coast says:

    Will absolutely Nothing short of a complete replacement of all the current Fed staff get them to raise the Fed Funds Rate from .025 ?
    Powell says he is going to raise the short-term interest rate
    is that a ploy to avoid raising the FedFunds Rate from .025

    Can Biden just order the Fed Fed Chair to raise the Fund Rate or must he replace the Fed chair as they are independent and if so how did Trump have Powell lower the rate legally speaking anyway .

  14. historicus says:

    Wolf, can you compile a Fed Funds to Inflation Chart?
    and a Fed Funds to 30YR mortgage chart?
    Or a Inflation to a 30YR mortgage chart?

    Or point to where you have done so in the past.

    I think those would point out the Fed Policy and how detached it is from historical norms.


    • Wolf Richter says:

      I think everyone knows what this would look like.

      • historicus says:

        I think one chart with
        30 yr mortgages
        and Fed Funds
        over a 25 year period would display in full force the switch from diligence to duty to obedience to some other authority by the Fed
        please reconsider

  15. Philip Elsas says:

    Forbearance endgame has started

  16. Brant Lee says:

    I don’t get the supply chain problem. The only supply chain we have down south is the Walmart truck, every other chain was wiped out years ago along with small business. At the ports, guess who gets to cut in line?

    • tom10 says:

      Supply chain looks great this year. Record acorn crop, deer & squirrels
      @ bubble popping #’s. Freezer is filling up fast. Canning and filling the shelves. New burning barrel, wood stacked high for the fire place.

      All my new country neighbors looking for a “good” home for their pet roosters.

      Who needs Walmart?

      • Trailer Trash says:

        Oak leaves make poor toilet paper, so I still need Walmart for that. But I still think it’s inefficient to order five items and receive at least three packages all from different warehouses.

        Recently I ordered an item on Walmart that was sold by a third party and fulfilled and shipped by … Amazon!

        It really is all one big club, and we definitely ain’t in it.

        • VintageVNvet says:

          Try a handful of sawdust saved from cutting the firewood TT; wet it with a bit of water if you are the sensitive type…
          Works well, especially if you use the cost efficient and very green system of moving the out house every year or so and planting an old non hybrid full size apple tree or similarly long lived food tree after putting a couple feet on top of the composted poop.

        • Trailer Trash says:

          I still have an outhouse for emergencies, like a few years ago when a very slow toilet leak froze up the septic line in February. It finally thawed out late April.

  17. Spencer Bradley Hall says:

    Best blog on the web.

    Powell: “But they will abate, and as they do, inflation is expected to drop back toward the Fed’s goal of 2%.”

    Inflation is not on track to hit 2% until 2023.

    Economists are running the economy diametrically in reverse. FAIT is folly. We now have stagflation. Latest Atlanta GDPnow estimate for the 3rd qtr: 2.3 percent — October 1, 2021

    Money products have a negative economic multiplier, whereas savings products have a positive economic multiplier. The “taper tantrum” is prima facie evidence, the FDIC’s reduction in unlimited deposit insurance back to $250,000 (as I predicted)>

    • historicus says:

      Never mentioned is that the 2% goes on top of the 5%……it accumulates and compounds…, 7% in two years is okay with j powell?

      If its “transitory”, how about a “transitory” response…..?? The Fed doesnt lift a finger. They are in a bubble. A very RICH BUBBLE

  18. wadge22 says:

    Curious/confused as to whether PPP loans are included in the transfer payments category in the second chart or not. It’s covered that they have an effect on the spending side, but not made clear on the income side. Or at least not clear enough for silly me.

    • Wolf Richter says:


      That’s an interesting topic – in the category of how all these stimulus payments distorted everything.

      On the income side: I don’t think they’re included because 1. they’re loans, and loans are not included (though most of them were forgiven), and 2. they were supposed to be given to businesses, not consumers, so this would be a different category.

      On the spending side: There have been studies that showed that most of that money when to just about everyone with some kind of business — lots of one-man or one-woman shows, and most businesses didn’t in fact need it, and they got it anyway. The people this went to were in fact consumers and this money was in fact spent as part of consumer spending.

      So it shows up in the spending accounts here, but it doesn’t show up in the income accounts. We’re talking about a total of $800 billion, spread over the span of a year. Not peanuts.

  19. lisa2020 says:

    Per the CBBO economic projections definitely further than the next 2 years, all is normal, as predicted and projected.

  20. .
    Good article Wolf but you only gave 1/3 of the story.

    The whole point of the economic stimulation is to boost employment and GDP.

    Hysteria mongering on inflation and supply are the traditional pose, so there is no shame in that.

    But you should include GDP and employment changes to see what we are getting for our troubles.

    Avraam Jack Dectis

    • Wolf Richter says:

      Avraam Jack Dectis,

      Go read my stuff on GDP and employment and job openings etc. before you tell me what I should do. Just because you didn’t read it, doesn’t mean I didn’t write it. Every report here has its own topic.

      “Hysteria mongering on inflation and supply…” good lordy, what ridiculous BS. Sheesh.

    • Yort says:

      Avraam Jack Dectis – “But you should include GDP and employment changes to see what we are getting for our troubles.”

      Is this a trick question…awwww…J-Pow, are you posting again on WS again? If so, hugs and kisses from the top 1%…HA

      Honestly though, at this past monthly rate, the bottom 99% are getting a massive NEGATIVE 2.4% to 3.6% (depending on transfer payment status) annualized loss of living standards per said Fed “economic stimulation”.

      But hey as long as J-Pow visits that homeless camp like he proposed recently, well I’m all good with the bottom 99% seeing their quality of life getting screwed out of existence by Fed and govt induced 5% annual inflation…(sarcasm)

      Per WS article, copied and pasted:

      “real” – personal income fell by 0.2% in August

      “Real” personal income without transfer payments fell by 0.3% in August

      • .
        Hi Yort,

        Thanks for the data.

        Did the article include the concurrent GDP growth and employment growth?

        WSJ are always pushing hysteria.

        The sky is always falling in their editorial offices.

        Avraam Jack Dectis

  21. Yort says:

    Looks like 1%er Fed Clarida is not worried about 5% inflation!

    Sure must be nice to “legally” make a seven figure gain via buying a long stock ETF a few days before voting to flood the markets with printed money. Of course it was “pre-planned rebalancing” Richard, of course it was…wink wink…

    Now get back to those minimum wage jobs folks, says the top 1%ers who literally voted their personal stock portfolio up 32% with printed money that needs to be paid back by taxing the wage slaves. It’s all abut the mooor jobs, honest…wink wink

    Per Bloomberg:

    Federal Reserve Vice Chair Richard Clarida traded between $1 million and $5 million out of a bond fund into stock funds one day before Chair Jerome Powell issued a statement flagging possible policy action as the pandemic worsened, his 2020 financial disclosures show.

    Clarida’s trades, described in forms filed with the government ethics office, show the shifting of the funds out of a Pimco bond fund on Feb. 27, 2020, and on the same day buying the Pimco StocksPlus Fund and the iShares MSCI USA Min Vol Factor exchange-traded fund in similar dollar ranges.

    • historicus says:

      but those supposed to watch are dirty too

    • MonkeyBusiness says:

      United Scammers of America.

      What’s new?

      But don’t worry, we’ll rely on these people to do the right thing.

  22. Auldyin says:

    1st two extremely interesting charts, I think give a great clue to where things went wrong.
    Chart 2 Real Persinc without tp’s, if you take the gap between W’s green line and the red line, this is what the Govt tried to fill in by all their programs.
    But they got it wrong by the extent of the peak above W’s missing greenline extension of the past trend in chart 1 Real Pinc.
    If you subtract the dips of chart 2 from the peaks of chart 1 you’ve got a pretty good indication of the excess demand side stimulus. Supply side shocks are an additional factor in the inflation of course.
    Nobody feels sorry for dividends which got hammered more than 30% in UK, don’t know about USA. I was lucky in closed end funds which maintained payments from reserves by arguing that revenues were recovering quickly and would replenish reserves in a year or so. Great advantage of closed end funds. IMO.
    If I get out of all this with a permanent end to QE I’ll be as happy as I’m ever going to be with anything any Goverment ever does.
    Don’t hold your breath long term.

  23. Gary Yary says:

    Previous Fed memo’s mention inflation can and should run above 2% for some time.

    Previous inflation rates were below the 2% rate and can run higher now to catch up. Like an alcoholic?

    I repeat my previous mentions of why even allow inflation to occur at any rate? The inflation is a societal norm…like k-12 education, I pledge allegiance to the flag…whatever.

    I am a patriot and tear up at the national anthem every time.

    The inflation tax. Let prices rise to get out of prior debt. Reeks of Communist agenda. Old coots like me will hate that analogy. How about the term: fiduciary manipulated crime? Or, scandal?

    It is just a 2% creep every year. Wait last year was only 1.9% – this year is gonna run at 3.2% until we adjust the measuring stick. 23% annual house price increase is now carried back one decimal place to 2.3%.

    Here is a .03% stimulus check to engage you while you master “shadow” puppets on your wall.

    How about the concept of relieving the Fed of their duty. Relieving the government of their duty.

    The USA is now USA, inc.

    A publicly traded company.

    Love them or hate them – Walmart, Best Buy, Target, 3M have done well consistently. They pay a dividend. They start no wars. Balanced budget like we all adhere to. Profit – like we all strive for.

    How about a variety of well selected executives run this hypothetical National company in the same fiduciary minded – profitable – ethical – legal and community supportive manner?

    Drop the ball…your fired.

    Insult a guest or customer…your fired.

    That is harsh Gary!

    Reek-age of harsh, yes.

    How about?

    Demote and promote. A great, admirable and motivational method to inspire USA, Inc. best practices?

    Buy your way to the top is current norm.

    How about…

    Earn your stripes. Earn your degree. Earn your income. Earn your status.

    Share that fortune as the ultimate reward?

    • CCCB says:

      Interesting chain of events…

      1. Govt mandates landlords cannot evict nonpaying tenants, placing much of the covid burden on landlords. (Confiscation of property rights = communism.)

      2. Govt eventually passes $46 Bil of rental assistance to subsidize nonpaying tenants (Socialism).

      3. Most large landlords and many small ones forgo claiming $$$ because they have to agree not to evict tenants for up to a year if they accept the money. (Last figures showed 89% of funds were unused.)

      3. Landlords begin evicting deadbeats (As Wolf said, a large part of covid payments were spent by tenants on cheap goods, NOT rent) Many could have paid rent but chose to buy more junk instead.

      4. End result … tenants still get evicted, landlords get screwed and $40+ Bil of borrowed money is now going back into the upcoming $1.5 Tril govt givaway.

      5. Post script – Wall Street single family rental companies buy up broke small landlord’s rental properties to lease out to all the homeowners priced out of the housing market by cash Wall Street buyers.

  24. Trailer Trash says:

    I recall that the financial press used to devote a fair bit of space to labor productivity, mostly as a way to justify wage cuts for lazy unmotivated workers and moving to non-union states. Fortunately Uncle Sam has handy charts on his Bureau of Labor Statistics webpage.

    For 2020, the non-farm business sector looks pretty good at 2.4%.

    The manufacturing sector looks awful. In spite of wage cuts, automation, off-shoring, and everything else that’s happened since 2007, the average annual change is only .2%. That looks truly awful. What red-blooded capitalist is going to invest with little prospect of profit rate increases?

    Looking at detail by industry looks pretty scary. Warehousing and storage shows -7.2% for 2020. I guess this reflects wage increases and lots of new employees that maybe are not so good at their jobs, or workers who hate their jobs and their bosses.

    Inflation is chewing up workers’ incomes while labor expenses are chewing up business income. There’s not going to be a good outcome from that mix. Looks like workers and business managers are now on the same side against the Fed and the Wall St parasites, except of course they don’t know it.

  25. Augustus Frost says:

    Two explanation I see for the latest monetary and spending insanity:

    Public policy makers believe their own lives and drivel, being just another group of lemmings heading for a plunge over the cliff.

    Some of them know the mediocrity and awfulness of the actual fundamentals (now and at least since 2008) but continue with it anyway as an exercise in “can kicking”. I believe these are a distinct minority but there is some of it too.

Comments are closed.