On Wednesday, the General observed:
For each of the 12 quarters during which Bush has been President, wage and salary disbursements as a percentage of total consumption has fallen, from 71% in 2001:I to 65% in 2003:IV. The same goes for total employee compensation, falling steadily as a percentage of consumption from from 86% in 2001:I to 79% in 2003:IV. Disposable personal income rose just 0.5% in real terms in 2003:IV while personal savings dropped to just 1.7% of disposable personal income, the lowest levels since the depths of the recession in 2001.Well, what kind of numbers for 2004:I did the cat drag in?
For January-March 2004, wage and salary disbursements as a percentage of total consumption slid down to 64.8%, from 65.1% in 2003:IV. Total employee compensation as a percentage of consumption shifted slightly lower, to 79.2% from 79.3%. Real disposable personal income for the quarter rose a robust 4.3% and personal savings ticked up ever so gently to 1.9%.
So while real income went up significantly, it yet again wasn't on the back of wages and salaries. Employer contributions to pensions and insurance were a big factor, up a whopping 13% in nominal terms. Dividend income rose 7.6% in nominal terms and nominal tax payments again fell -- 10% for 2004:I -- both especially "toxic" sources of income. Perhaps the slide in wages and salaries as a percentage of consumption has stopped, but there is still no sustainable foundation for US consumption under construction.