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Real Disposable Income (DPI) and Real Personal Consumption Expenditures (PCE) data from the BEA, chart by MishThe word “real” means inflation-adjusted. It’s real income and spending that are inputs to GDP.Transfer payments are redistributions of money for which there are no goods or services exchanged. Social Security, Medicare, Medicaid, and food stamps (now called SNAP) are examples of transfer payments. I added Real DPI Less Transfer Payments to the chart because that is what the NBER uses as an input to determining recessions.November Highlights Real DPI: 0.3 PercentReal DPI Less Transfer Payments: 0.3 PercentReal PCE: 0.0 PercentEstimating December PCEThe Bloomberg Econoday consensus for PCE is -0.1. I expect it will be even lower and/or the BEA will revise November lower as well. My expectation is based off December retail sales.December Was Another Retail Sales Disaster, Even Worse With Negative RevisionsRetail sales from commerce department, chart by MishKey Points Advance estimates of U.S. retail and food services sales for December 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $677.1 billion, down 1.1 percent (±0.5 percent) from November.The October 2022 to November 2022 percent change was revised from down 0.6 percent (±0.5 percent) to down 1.0 percent (±0.2 percent). Not only was December a disaster, the commerce department revised November from -0.6 percent to -1.0 percent.I expect the BEA will do the same making November PCE negative.Scroll to ContinueMonth-Over-Month Advances and DeclinesFood Service: -0.9 percentFood Stores: +0.0 percentGas Stations: -4.6 PercentGeneral Merchandise: -0.8 PercentExcluding Motor Vehicles and Gas: -0.7 PercentExcluding Motor Vehicles: -1.1 PercentNonstore (Think Amazon): -1.1 PercentMotor Vehicles: -1.2 PercentDepartment Stores: -6.6 PercentReal spending fell off the cliff starting November and accelerated in December.When a Recession Will StartLacy Hunt at Hoisington Management and I discussed the timing the recession. We both think a recession has started. Although DPI minus transfer payments may be higher, real PCE is a strong favorite to be negative.The NBER, the official arbiter of recessions looks at real personal income less transfers, nonfarm payroll employment, real personal consumption expenditures, wholesale-retail sales adjusted for price changes, employment as measured by the household survey, and industrial production. Industrial production, retail sales, full time employment are negative. I expect negative revisions to jobs and income. Even without jobs, if this data holds, we are in recession. For discussion, please see A Better Definition of Money and Lacy Hunt’s Thoughts on When a Recession Will StartThis post originated at MishTalk.Com.Thanks for Tuning In!Please Subscribe to MishTalk Email Alerts.Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.If you have subscribed and do not get email alerts, please check your spam folder.Mish

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