Personal income rose 0.4% in May, according to the Bureau of Economic Analysis. It may not sound like much, but it marked the fifth straight month in a row that incomes rose. Not only that, but incomes are rising faster than inflation — an encouraging sign that people are gaining more buying power.
After accounting for both taxes and inflation, disposable income is up 1.9% from a year ago. This is an important development because consumer spending drives the bulk of the U.S. economy.
But here’s the catch: Consumers haven’t been going out and spending. Instead, they’re choosing to sock that money away.