The shutdown slowed down news indicating a slowing economy

The shutdown-delayed Income and Spending report for Dec 2018 and incomes for Jan 2019 came out last week. And both gave a picture of a slowing consumer economy, and incomes rising only in a cosmetic way.

In December, there was a sizable jump in incomes, but spending reflected the bad numbers we saw in retail, which had their largest one-month drop in nearly 10 years.

Personal income increased $179.0 billion (1.0 percent) in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income increased $173.1 billion (1.1 percent), and personal consumption expenditures decreased $76.6 billion (-0.5 percent).

Real DPI increased 1.0 percent in December and real PCE decreased 0.6 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in December primarily reflected increases in personal dividend income, compensation of employees, and farm proprietors’ income (table 3). Personal dividend income increased $83.4 billion, primarily reflecting a one-time special dividend payment by VMware Incorporated. Farm proprietors’ income increased $29.2 billion, which included subsidy payments associated with the Department of Agriculture’s Market Facilitation Program.

So 2/3 of that big increase in incomes is due to Wall Street dividends and farm subsidies. Otherwise, incomes were up a solid-but-not spectacular 0.4% in December.

The drop in spending at Christmas shopping season also indicates a worried consumer. However, we did not have January's spending numbers to see if that continued, which would put Q1 2019 growth in question.

Instead, all we had was the January income reports. And what goes up due to one-time factors must go down.

Personal income decreased $23.8 billion (-0.1 percent) in January. Disposable personal income (DPI) decreased $35.1 billion (-0.2 percent); Real DPI is unavailable for January.

The decrease in personal income in January primarily reflected decreases in personal dividend income, farm proprietors’ income.

Now, it wasnt all bad for January incomes, as wages and salaries were still up a decent 0.3%. But that overall drop makes the February and March reports very big, in seeing whether the overall incone decline or wage increase is the accurate predictor for Q1 2019 growthm.

The report also featured the year-long estimates of income and spending growth. And despite the GOP Tax Scam being in effect for 2018, there was little change in incomes or spending last year.

Personal income (table 6) increased 4.5 percent in, compared with an increase of 4.4 percent in 2017. DPI increased 5.0 percent in 2018 compared with an increase of 4.4 percent in 2017. In 2018, PCE increased 4.7 percent, compared with an increase of 4.3 percent in 2017.

Real DPI increased 2.9 percent in 2018, compared with an increase of 2.6 percent in 2017. Real PCE (table 8) increased 2.6 percent, compared with an increase of 2.5 percent in 2017.

And now millions of Americans are paying back those tax cuts as they file with the IRS at the start of 2019. So where is growth going to continue?

We will get a lot of economic data in the next couple of weeks as the backlogs from this year's shutdown clears. And it'll be very intriguing to see if incomes and spending continue on the way up with no real stimulus or momentum existing to help it along.