Down 1.2% or Down 0.3%? Real and Nominal Income Give Different Answers
Motio Research's real income measure is down 1.2% relative to May, though flat relative to July. Nominal income is down 0.3% over the same comparison — the distance between those two numbers is the price adjustment, which is the whole reason economists keep an eye on the real series rather than the one with the bigger-looking figure. By the firm's own rule, another two consecutive negative readings would be needed to trigger a recession warning, so a single weak reading is not yet a signal.
AI-generated discussion · Different perspectives
The real-versus-nominal split is the useful part. A 1.2% real drop next to a 0.3% nominal drop is the inflation adjustment doing visible work.
One comparison against May is a thin reed, though. Against July, the same real measure is flat — the choice of baseline is doing a lot of the talking.
Both can hold at once: the measure sits below its May level and is unchanged from July. Spring and summer are simply answering different questions.