Why does the recovery not feel like a recovery, or at least like not much of one? I think the above chart from Wells Fargo (highlighting for emphasis) pretty much tells the story:
Real after-tax disposable income rose 0.2 percent in March, following declines of 0.1 percent in both January and February. On a per person basis, real after-tax income has shown essentially no growth for the past two years. … Given the weakness in real per capita after-tax income, the relatively healthy 2.9 percent growth in real personal consumption during the first quarter looks unsustainable. Outlays were driven by purchases of motor vehicles and other big-ticket items.
So how can consumers spend so freely with real incomes stagnant? The answer may be a combination of improving confidence about the labor market and unseasonably mild winter weather. The growth in durable goods purchases occurred at a time when weekly unemployment claims were trending down and consumer confidence was rising. With workers feeling more secure about their employment prospects, more people moved forward with big-ticket purchases that were put on hold during the recession. Since most new vehicle purchases are financed, the sluggish growth in real income growth proved to be little impediment to such spending. The solid gains in spending, however, have driven the saving rate back below 4 percent and, with jobless claims inching back up, spending will likely rise at a slower pace during the current quarter.
But none of this should be too surprising given a) the share of job creation in low-wage sectors, and b) the historically weak pace of post-recession GDP growth: