> June 2009 Personal Income/Spending

The government giveth, the government taketh away, at least when it comes to personal income. After one-time payments to recipients of Social Security and other benefit programs pushed total personal income up by 1.3 percent in May, the absence of such payments led to a 1.3 decline in personal income in June. Aside from the swings in transfer payments, the underlying trends in personal income remain weak, with wage and salary income, proprietors' income, and dividend income in the throes of long-running declines not likely to reverse soon. This bodes poorly for any forceful rebound in personal consumption spending over the months ahead, at least once we are clear of the distortions introduced by the cash-for-clunkers program, which will provide a transitory boost to the Q3 spending data.

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