This didn’t make any headlines in the mainstream media but the latest GDP report brought ominous news on the economic front.
Real disposable income saw its worst drop in 2022 since 1932, during the Great Depression.
Real disposable income fell by over 6% and a trillion dollars!
Context: second worst drop in real disposable income EVER, behind Great Depression year of 1932: https://t.co/0A5VH2ZaY3 pic.twitter.com/hl7sXfvlSJ
— EJ Antoni (@RealEJAntoni) January 26, 2023
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FOX News reported:
But perhaps most troubling is the precipitous drop in real disposable income, which fell over $1 trillion in 2022.
For context, this is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression. To keep up with inflation, consumers are depleting their savings and burning through the “stimulus” checks they received during 2020 and 2021. Credit card debt continues growing, while savings plummeted $1.6 trillion last year, falling below 2009 levels.
As consumers continue depleting cash reserves and borrowing costs are rising, the growth in consumer spending will keep slowing. Since that accounts for roughly two-thirds of GDP, this doesn’t bode well for the economy.
Just how much pain is the consumer feeling? The average family has lost about $6,000 in annual purchasing power under Biden because prices have risen so much faster than wages. Higher interest rates have increased annual borrowing costs by $1,400, so that the average family effectively has $7,400 less in their annual budget.