Inflation is never benign, it always ends up transferring wealth from individuals to the government. From Schiffgold at schiffgold.com:
Personal income rose again in August, but once again rising prices ate up all the gains and then some.
Economists and pundits talk about inflation as an academic exercise. They rarely reflect on the fact that rising prices have real impacts on real people.
Personal income from all sources rose by 0.2% from July to August. This includes wages, stimulus payments, transfer payments (unemployment, Social Security benefits, etc.) along with income from other sources such as interest, dividends, and rental income, according to the latest data from the Bureau of Economic Analysis.
But when you factor in inflation, “real” personal income fell by 0.2%. When factoring out government transfer payments, “real” personal income dropped 0.3% and fell below the pre-pandemic level in February 2020.
So, while Americans saw more money in their wallets, they were able to buy less with those dollars. As WolfStreet put it, “It’s tough getting beaten up by the worst bout of inflation in 30 years.”
The green line represents the pre-pandemic trend.
This is the second month in a row real incomes have dropped.