Recessions and Income Declines

November 18, 2011 | Nat Kellogg, CFA, President

This chart looks at the drop and recovery in real personal income during recessions over the last 50 years (personal income is shown as a percentage of the previous peak to look at prior recessions on an apples-to-apples basis). The red line (Real Personal Income less Current Transfer Receipts) shows inflation adjusted after-tax disposable income not including government support (i.e. net social security receipts, unemployment insurance, etc.). The gray line (Real Disposable Income) shows inflation adjusted after-tax disposable income including government support.

A few things stand out. First is the depth of the 2008 – 2010 recession, which was far worse than any prior drop in U.S. incomes. Second, this chart shows the role of government support during recessions, as the drop in real disposable income is far less than would otherwise be expected, due to government support. Thirdly, the drop in real disposable incomes over the last three months is a worrying trend. This is especially true given the growing talk in Washington over reducing government support of disposable income through higher taxes and/or lower spending.

Falling real incomes and less government support does not bode well for U.S. economic growth over the coming quarters.

Nat Kellogg, CFA
President

Get to Know Nat

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content

02.13.2025

The Debt and Deficit Dilemma

The new year brings a new political administration with fresh approaches and drastically different perspectives on topics ranging from immigration…

02.19.2025

No Longer Stuck in the Middle?

By now, readers likely know that large-cap equities propelled the U.S. equity market higher in 2023 and 2024, as the…

02.11.2025

Egg Prices Ruffle Consumer Feathers

While investors scrutinize rhetoric from the Trump administration for its potential to ignite another bout of inflation for U.S. consumers,…

02.04.2025

Assessing the Trade War “Battlefield”

The tariff plans announced by President Trump in recent days represent a significant escalation in trade policy and a shift…

01.28.2025

Alternatives to Drive Growth in the Next Real Estate Cycle

As the real estate market evolves, alternative sectors are expected to drive significant growth in the coming years. Senior housing,…

01.23.2025

New Year, New President…Same Outlook?

From an investor’s perspective, the current environment feels lot like it did twelve months ago: U.S. equity markets returned over…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >