GDP was up 3.5% in the third quarter, and yesterday I wondered where all that growth was going. Today we get part of the answer: not to workers.
The BEA reports that personal income and disposable personal income, adjusted for inflation, were down again in September and down for the entire quarter. Spending was up in August thanks to Cash for Clunkers, but dropped 0.6% in September.
Separately, the BLS reports that the Employment Cost Index was up 0.4% in the third quarter. However, since inflation rose about 0.6% in the same period, that's a real decrease of about 0.2%. "With incomes so soft," analyst Ian Shepherdson said in a statement of the obvious, "increased spending will be a struggle."
So: the economy is growing, but very little of that growth seems to be trickling down to us middle class types. Happy holidays!