Personal income fell by $505.5 billion (3.6 percent) in January, the biggest monthly drop in 20 years, according to the Bureau of Economic Analysis.
Think about that: The last time we saw a monthly drop like this, Meatloaf was making halfhearted promises about doing things for love.
But that's not all: Real disposable income also fell by 4.0 percent, which, obviously, is a disappointing change from the 2.7 percent increase seen in December 2012.
Here's a chart illustrating the sharp decline in personal savings rates:
But not all is lost. There is some good news.
“Personal consumption expenditures (PCE) increased $18.2 billion, or 0.2 percent,” the report adds.
“In December, personal income increased $353.4 billion, or 2.6 percent, DPI increased $325.7 billion, or 2.7 percent, and PCE increased $14.8 billion, or 0.1 percent, based on revised estimates,” it adds.
From Hot Air's Ed Morrissey:
Consumer spending rose, however, which means that the potential for economic growth remains — if we tool our policies to encourage it. This also shows that the mini-apocalypse predicted because of the expiration of the payroll-tax holiday was nonsense. Personal consumption expenditures hit their highest mark (in annual rates, in chained 2005 dollars) in at least seven months, the length of time shown in the tables at the end of the report. By the same measure, January outpaced all four quarters of 2012. The supposed stimulus of the PTR was vaporware, as was the anti-stimulus of its expiration.
The real problem is still stagnant job creation caused by increasing government hostility toward capital and investment.
"Until we solve that," he concludes, "wages will not rise as labor remains a buyer’s market, and consumer spending won’t continue to improve for long in this environment."
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Featured image screen grab. This post has been updated.