The government reported this morning that personal income took a big hit in June:
Personal income fell in June after surging in the previous month on government stimulus, while spending by individuals increased, the government said Tuesday.
The Commerce Department said personal income fell 1.3% in June, compared with a revised 1.3% increase in May, when government stimulus boosted social benefits payments and reduced taxes.
The June decrease was the largest drop in personal spending since January 2005, when incomes fell 2.3%. It was also larger than the 1% decrease analysts surveyed by Briefing.com had forecast.
Excluding the impact of the government’s economic stimulus, incomes eased 0.1% in June and were essentially flat in May, according to the report.
This is more evidence that consumers are out of bullets and won’t be participating much in the recovery. This will also cause major problems for President Obama since the “income gap” continues to widen.