Consumer Spending, Incomes Rise

By:: Kirk Haverkamp | May 03, 2010

Consumer spending and personal incomes both rose in March for the sixth consecutive month, raising hopes of a sustained, though weak, economic recovery.

Personal incomes were up at an annual rate 0.3 percent, following a 0.1 percent gain in February, according to figures released today by the Commerce Department. Personal spending rose 0.6 percent, slightly higher than the 0.5 percent annual rate of the month before.

Consumer spending has now increased every month since last October, although at a weak, but fairly steady rate. Incomes have been recovering somewhat more slowly since bottoming out in the first quarter of 2009.

Today’s report on income and spending follows Friday’s announcement that the Gross Domestic Product increased at an annual rate of 3.2 percent in the first quarter of the year, according to initial estimates. An updated estimate will be released in late May as more data becomes available.

Private wages and salaries increased by $11.8 billion in March, up from $6. 8 billion in February. Of particular note, payrolls in goods-producing industries were up $2.2 billion, following a $3.3 billion decline in February, and manufacturing payrolls were up $0.3 billion, following a $1.1 billion decline the month before. Both were exceeded by increases in wages and salaries in service-producing industries, which were up $9.6 billion, similar to the a $10.0 billion increase posted in February.

Consumer saving declined, falling to 2.7 percent of disposable income from 3.0 percent the month before. It was the third consecutive monthly decline, falling from 4.0 percent in December, suggesting that consumers are becoming less apprehensive about their personal economic situations.

Spending on durable goods, such as automobiles, was up a seasonally adjusted 3.4 percent in March, following a 1.0 percent again in February. Expenditures on services remained flat, showing a 0.0 percent change.

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