Real income growth among US households is weakening: Real disposable income, excluding government transfers, is down -0.1% since April 2025. Government transfers include Social Security and unemployment benefits, so this measures after-tax income from labor and capital sources, excluding government support. Over the same period, real personal spending is up +1.5%, a growing gap that is being funded by a declining savings rate and rising household debt. In February alone, real disposable income fell by an annualized -5.3% MoM, the sharpest drop in 10 months. This comes as wage growth is failing to keep pace with inflation amid a softening job market. This data does not yet include the oil shock from the Iran War, which will put further downward pressure on real income as companies are already passing on higher fuel and material costs. Inflation remains a major issue for Americans.(The Kobeissi Letter)