This reflects after-tax income adjusted for inflation.

It’s important for understanding households’ purchasing power and overall financial well-being.

A drop in real income is a strong sign that a recession has already started to affect the average household, leading to a cycle of reduced spending and investment that exacerbates the recession.

When real income rises, consumers generally have more purchasing power, leading to increased economic activity. A decrease in real income restricts consumer spending and may herald an economic contraction.

Real income generally lags behind other indicators and tends to decline once a recession is already underway, confirming the downturn.

Track this yourself

You can find Real Income on TradingView:

https://www.tradingview.com/chart/v7ZG3yMA/?symbol=FRED%3ADSPIC96