Commentary
American consumers—the backbone of the post-pandemic recovery—are losing the wherewithal to keep up their spending. Signs were already evident in the uneven pace of spending growth during recent months.
Matters have become crystal clear in the income data reported by the Commerce Department. Households are already sacrificing savings flows just to keep up with current rates of spending, much less to expand them. The future cannot help but see spending slowdowns and likely cutbacks that will slow or halt the overall pace of economic growth.
To be sure, the top-line income figures still look good. A continuing robust pace of hiring and decent wage growth has so far this year pushed up paycheck income 9 percent at an annual pace. That tops even the unconscionably high rates of inflation plaguing the country. Proprietors’ incomes have lagged, growing at only a 3.5 percent annual pace. Evidently, rising costs have eaten away any gains these businesses might have enjoyed from increasing prices….