In May, real disposable income was $16,154 billion, which was 8.2% more than one year ago. This was the second-highest level of real disposable income ever. However, it was more than $800 billion lower than the income level in April because of lower transfer payments less in May than April. The 8.2% growth rate in May was more than 2.5 times the historic average month-over-month growth rate in real disposable income. Clearly, the month-over-month growth is a direct result of government payments to individuals. Will these payments continue? If not, how far will disposable income fall?

The annual rate of growth accelerated to 3.8%. This was the fastest rate of annual growth since January 2019. Normally, this kind of acceleration would lead to a dramatic increase in consumer spending. However, this clearly has not happened since the start of the pandemic. Keep in mind that changes in real disposable income typically lead capital equipment consumption by almost 24 months.