“Real disposable income, the money that ordinary folks out there are holding on to after their taxes and everything like that, it's only growing around 1.5% after inflation. That's half the rate of economic growth. Why the difference? Because so much of this economic growth is investment. It's AI, it's profits. It's not trickling down to ordinary workers. And I think that explains why people are so unhappy about the economy now, even though the numbers tell us it's doing really well.”
Marketplace (APM) · Money & Markets · October 2026
Context
Kai Ryssdal asked about the week's GDP and inflation data. Ipp first notes a strong quarter, then looks at the income side: growth is going to investment and profits rather than household pay, which he offers as the reason for public gloom.
Transcript
Yep.
You know, it was a great
quarter for the economy, 3.4% annual rate, best in a year. If you actually look under the hood, there are some measures of demand growing around 5% best in three or four years. It's an economy that's not just strong, but it's accelerating. But, Kai, the thing that I find striking is that if you actually look at the income side of the statement, you know, where's the money going that is basically being thrown off by this fast-growing economy? Real disposable income, the money that ordinary folks out there are holding on to after their taxes and everything like that, it's only growing around 1.5% after inflation. That's half the rate of economic growth. Why the difference? Because so much of this economic growth is investment. It's AI, it's profits. It's not trickling down to ordinary workers. And I think that explains why people are so unhappy about the economy now, even though the numbers tell us it's doing really well.
Yeah. All right. So we'll get to AI in just a second. Kate Davidson did want to talk for a second about something the chairman mentioned a couple of three or four times in his 32-ish minutes of the press conference. He talked a lot about financial conditions and how it's tightening a little bit.…
Right. There had been that idea sort of out there. And that's something that's been talked about in the past. When we have seen a run-up in yields, as we've seen this year, Fed officials have at times previously said, well, this is helpful to us. And they might have broached, a couple of them might…
Just so the listeners are clear, financial conditions being a tailwind means they are not restrictive enough, right? They're not holding back economic activity.
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