In July 2021, real disposable income was $15,577,468 (millions of USD, SAAR). This was down 3.5% from one year ago. Also, July was the fourth consecutive month of contraction in real disposable income. Although, the rate of contraction decelerated each month. Real disposable income contracted these four months for two reasons: 1) high inflation and 2) waning stimulus. Both of these effects seem like they will be around for some time. Therefore, real disposable income is likely to contract more until it’s closer to pre-pandemic levels of income.

The annual rate of growth in real disposable income decelerated to 3.9% in July. This was slightly more than the historic average growth rate and the slowest rate of growth since May 2020. The decelerating growth in real disposable income is likely to cause a peak in real consumer spending in the second half of 2021.