… The single most politically potent economic indicator is not unemployment, inflation, or the deficit, but rather change in per-capita real disposable income, a less heralded statistic that measures the average amount of inflation-adjusted money individuals have left after paying taxes. Capturing the impact of unemployment, inflation, salaries and government transfer payments, as well as taxes, it’s not a number people know, or even know about; rather, it’s one they feel every time they decide whether to buy or to do without.
Equally important, it measures change. We are, as calculus geeks would say, a first-derivative nation; we care more about change than about levels, focusing on where things have been headed, rather than on where they stand. President Biden’s American Rescue Plan injected vast sums into the economy. Disposable incomes shot up and the president’s approval rating stayed up.
But that sudden, short-term burst in incomes meant an equally sudden decrease in the rate of increase in the months following, and that’s what we are living through now. Real disposable incomes actually declined in September — and predictably, the president’s approval rating is suffering. CONTINUED
Mark Mellman (Mellman Group), The Hill
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