Wrong convergence

Real disposable income per capita continues to rise—for a few, at any rate. Meanwhile, residential rents also continue to rise. The gap between the two represents what many have available to spend on non-housing expenses. Those expenditures contribute to economic growth and better employment figures. Let’s look at a chart:

disposable income per capita and rent cpi

Source: St. Louis FED

During the last years of the Carter administration rents began a sharper upward trajectory, eventually wiping out the gap between income and housing costs.