In November, Personal Income rose just 0.1% while Personal Spending was also up 0.1%. Both were below expectations of increases of 0.2% and 0.3% respectively. With both income and spending rising at the same pace, the savings rate should not change, but due to rounding it slipped slightly to 3.5% from 3.6%.
The quality of the income was also disappointing. Private wages and salaries actually fell by $7.1 Billion down from an increase of 37.2 billion in October (seasonally adjusted annual rates, as are all the numbers here). The hit was concentrated in Manufacturing where wages were down by $6.9 billion while service sector wages were down $0.3 billion. In October manufacturing wages were up $6.8 billion while service sector incomes gained $28.5 billion.. Government wages drifted up by $0.1 billion in each month.
While income from labor was weak, income from capital remained strong. Interest income rose $2.1 billion on top of a $2.2 billion rise in October, while dividend income rose by $4.3 billion on top of a $7.2 billion rise in October. Rental income rose $8.9 billion on top of a $8.5 billion rise in October.
Income from Transfer receipts, including Social Security, Medicare, and unemployment insurance was up $1.6 billion partially reversing last month’s $4.9 billion drop.
The data suggest that income inequality continues to grow. Capital income only flows to the owners of capital, and wealth is even more concentrated than income in the US. Equities in particular are very concentrated. It is the very wealthy who get the bulk of their income in the form of dividends and interest payments. That income is also important to retirees. The middle class is mostly dependant on wages and salaries for their income. The poor (and retirees) are highly dependent on transfer payments.
However, it does show that owners of dividend paying stocks continue to be rewarded. The continued rise comes as the dividend yield of the S&P 500 is above the yield on the 10 year T-note. The coupon payment on a 10 year T-note is guaranteed never to rise. That is a key reason I favor stocks over bonds today.
This was a report written by the Grinch, not Santa.
