{"id":828172,"date":"2026-08-28T02:04:14","date_gmt":"2026-08-28T02:04:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/828172\/"},"modified":"2026-08-28T02:04:14","modified_gmt":"2026-08-28T02:04:14","slug":"inflation-exacts-its-pound-of-flesh-how-americans-earned-their-income-from-all-sources-except-capital-gains","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/828172\/","title":{"rendered":"Inflation Exacts its Pound of Flesh: How Americans Earned their Income from All Sources except Capital Gains"},"content":{"rendered":"

\t\t Income from wages & salaries, small businesses & farms, rentals, dividends, interest, and from the government.
\nBy\u00a0Wolf Richter<\/a>\u00a0for\u00a0WOLF STREET<\/a>.<\/p>\n

The surge of inflation since mid-2025 has knocked a hole into the purchasing power of the income that Americans earn, but not as bad as the hole during the high-inflation years from 2021 through mid-2022, which took big pay increases and well over a year to dig out of. Then, after rising through mid-2025, their earnings\u2019 purchasing power got whacked again by the next surge of inflation \u2013 though smaller this time.<\/p>\n

Inflation-adjusted personal income, excluding transfer receipts from the government (Social Security and other government programs), rose by 0.19% in July, the third month in a row of increases after a series of declines since September 2025. Compared to the peak in September, it was down by 0.63%. Compared to July last year, it was down by 0.38%. Compared to July two years ago, it inched up by only 0.86%. That\u2019s the effect of a sudden increase of inflation that started mid-2025 while wage increases initially lag behind.<\/p>\n

This income does not include capital gains where the wealthy make most of their money. And it does not include benefits paid by the government. It includes:<\/p>\n

Wages and salaries
\nEmployer contributions to private and government pension and insurance plans
\nProprietor\u2019s income (from personally owned businesses and farms)
\nRental income
\nInterest income and dividend income<\/p>\n

\"\"<\/p>\n

Not adjusted for inflation\u2026<\/p>\n

Personal income without transfer receipts from the government rose by 0.35% in July from June, and by 3.3% year-over-year, not adjusted for inflation, to a seasonally adjusted annual rate of $21.9 trillion in \u201ccurrent dollars\u201d (while the chart above is expressed in \u201c2017 dollars\u201d for inflation adjustment).<\/p>\n

\"\"<\/p>\n

Compensation of employees consists of wages and salaries and employer contributions to employee pension and insurance funds and to government social insurance. Compensation of employees accounted for 60% of total income.<\/p>\n

Not adjusted for inflation, compensation of employees increased by 38% since January 2020. Increases in July from June, and year-over-year, by category:<\/p>\n

Compensation of employees (red): +0.29% monthly, +3.5% YoY
\nWages and salaries (blue): +0.29% monthly, +3.5% YoY
\nEmployer contributions (purple double line): +0.27% monthly, +3.6% YoY.<\/p>\n

\"\"<\/p>\n

Income from other sources:\u00a0Two categories are income from investments (dividend income and interest income) and two categories are from entrepreneurial endeavors: Proprietor\u2019s income (from personally owned businesses and farms) and income from rentals.<\/p>\n

Dividend income became #1 in this group during the stock market surge fueled by the Fed\u2019s money printing mania in 2020 and 2021. Since January 2020, it increased by 68%.<\/p>\n

Proprietor\u2019s income rose by 35% since January 2020, slightly behind wages and salaries (+39%). It remained #2 in this group, but the gap between it and dividend income widened.<\/p>\n

Interest income declined after the Fed started cutting interest rates in 2019 and then rose again when the Fed hiked rates. Since January 2020, it increased by 30%.<\/p>\n

Rental income has increased by 60% since January 2020, a result of the massive inflation, that included soaring rents in the 2020-2022 period.<\/p>\n

Month-to-month and year-over-year by category:<\/p>\n

Dividend income (red): +0.58% monthly, +3.6% YoY
\nProprietor\u2019s income (gold): 0.50% monthly, +3.1% YoY
\nInterest income (blue): +0.32% monthly, +3.6% YoY
\nRental income (purple double line): +0.33% monthly, +4.0% YoY<\/p>\n

\"\"<\/p>\n

Government social benefits to persons rose by 0.59% monthly and by 5.1% year-over-year. This includes amounts that are paid directly to consumers, such as Social Security benefits and unemployment insurance benefits; and it includes amounts that are paid to service providers, such as Medicare and Medicaid, with indirect benefits going to consumers.<\/p>\n

Medicare, Medicaid, and V.A. payments to healthcare providers soared over the past 12 months.<\/p>\n

But unemployment insurance benefit payments fell further.<\/p>\n

Social Security (red): +0.20% monthly, +5.0% YoY
\nMedicare (gold): +0.83% monthly, +10.5% YoY
\nMedicaid (blue): +1.33% monthly, +8.5% YoY
\nVeterans\u2019 benefits (dotted green): +1.08% monthly, +11.3% YoY
\nUnemployment insurance benefits (double purple): -1.7% monthly, -9.0% YoY<\/p>\n

\"\"<\/p>\n

In case you missed it: How Americans Spent their Trillions of Inflation-Adjusted Dollars on Goods & Services and How that Changed<\/a><\/p>\n

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:<\/p>\n

\n\"\"<\/a>\n<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"Income from wages & salaries, small businesses & farms, rentals, dividends, interest, and from the government. By\u00a0Wolf Richter\u00a0for\u00a0WOLF…\n","protected":false},"author":2,"featured_media":828173,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101],"class_list":["post-828172","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/828172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=828172"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/828172\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/828173"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=828172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=828172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=828172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}