Americans spend but incomes barely rise
By Martin Crutsinger |
March 2, 2010, Tuesday
|
Print Edition
Print Edition
PERSONAL spending in the United States jumped by a larger amount than expected in January but Americans' incomes barely budged as millions of Social Security recipients did not get their usual cost of living boost. The weak income growth could depress spending in the months ahead, acting as a further drag on the fragile economic recovery.
The US Commerce Department yesterday said personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected.
The income gain was the weakest showing in four months and raised more concerns about whether consumers will be able to keep spending at a sufficiently strong pace to support an economic rebound. Consumer spending is closely watched as it accounts for 70 percent of total economic activity.
The 0.1 percent rise in incomes was below the 0.4 percent gain that economists had expected. The weakness came even though private wages and salaries rose by US$16.1 billion at an annual rate, compared with a US$2.3 billion gain in December.
However, households did not get the usual boost they see from the government's annual cost-of-living adjustment for Social Security and other benefits. The 50 million Social Security recipients saw no gain at all in January because of low inflation, the first time that has occurred in more than three decades. In January 2009, incomes had risen at an annual rate of US$41.1 billion because of that year's cost of living adjustment.
For the past two years, income growth has been held back by job losses caused by the worst recession since the 1930s. For all of 2009, personal incomes actually fell by 1.7 percent.
The US Commerce Department yesterday said personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected.
The income gain was the weakest showing in four months and raised more concerns about whether consumers will be able to keep spending at a sufficiently strong pace to support an economic rebound. Consumer spending is closely watched as it accounts for 70 percent of total economic activity.
The 0.1 percent rise in incomes was below the 0.4 percent gain that economists had expected. The weakness came even though private wages and salaries rose by US$16.1 billion at an annual rate, compared with a US$2.3 billion gain in December.
However, households did not get the usual boost they see from the government's annual cost-of-living adjustment for Social Security and other benefits. The 50 million Social Security recipients saw no gain at all in January because of low inflation, the first time that has occurred in more than three decades. In January 2009, incomes had risen at an annual rate of US$41.1 billion because of that year's cost of living adjustment.
For the past two years, income growth has been held back by job losses caused by the worst recession since the 1930s. For all of 2009, personal incomes actually fell by 1.7 percent.
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