February Personal Income Report: Negatives Abound

By SBE Council at 30 March, 2025, 4:32 pm

by Raymond J. Keating -

The latest personal income report from the U.S. Bureau of Economic Analysis starts off looking good, but then turns into a bad news story.

First, the good news was that income growth was strong in February.

Personal income grew by 0.8 percent in nominal terms, and real disposable personal income (i.e., personal income less personal current taxes adjusted for inflation) was up by 0.5 percent. Real disposable income is a key measure, as this is what individuals use for consuming, savings and investing.

But other key takeaways fall into the bad news category.

When going inside the personal income data, proprietors' income with inventory valuation and capital consumption adjustments, which is a measure of small business income, grew by only 0.1 percent in February. When inflation is factored in, that's a real decline in small business income. And that came after a nominal decline of 0.1 percent in January (worse in real terms).

Also, real personal income excluding transfer receipts (mainly government programs) grew at a mere 0.1 percent in February, with 0.1 percent growth registering in January and December as well.

And then there's bad news on inflation, as measured by the personal consumption expenditures (PCE) price index, which came in at 0.3 percent in February. That was hotter than the Consumer Price Index (CPI) inflation measure of 0.2 percent.

For good measure, more bad news has to do with continuing consumer unease. This was clear as real spending, as measured by real PCE, grew by a woeful 0.1 percent in February.

This is another troubling report in the face of considerable threats to growth in 2025, including inflation and major tariff increases.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .