Following today’s release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a modest slowdown in personal spending (to be expected one month after the savings rate in the US hit a record), coupled with a modest decline in personal income (as government benefits and stimulus checks slowed substantially).
But while the change in the headline data was indeed notable, what was far more remarkable was less followed data showing just how reliant on the US government the population has become.
We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In May, this number was $4.9 trillion annualized, and while it is down from the record $6.6 trillion hit in April when the US government activated the money helicopters to avoid a total collapse of the US economy, it was nearly $2 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.
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