Personal Income Rises 0.4 Percent
Filed at 11:36 a.m. EDT
WASHINGTON (AP) -- Americans' personal
income rose again in March but their spending
kept pace, leaving the savings rate at a record
low.
Personal income increased a seasonally
adjusted 0.4 percent in March following a 0.5
percent gain in February and a 0.6 percent rise
in January, the Commerce Department said
today.
Consumers matched their income growth with
a 0.4 percent spending speedup in March, more
moderate than February's 0.8 percent rise but
nevertheless adding an eighth month to a
streak of increases.
Overall spending has outpaced income growth,
leaving the nation's personal savings rate --
savings as a percentage of after-tax income --
in negative territory for five of the last six
months. In March, the savings rate held steady
at a record low of minus 0.6 percent.
The consumer spending spree helped keep the
U.S. economy growing at a robust 4.5 percent
annual rate during the first three months of this
year, despite analysts' expectations that
overseas economic turmoil would take more of
a toll.
Low interest and mortgage rates have also
fueled spending on construction projects,
which rose 0.5 percent in March, despite a
drop in commercial building, the Commerce
Department said in a separate report today.
That came on top of four previous months of
increases, including a big 2 percent jump in
February.
Construction spending for the first three
months of 1999 was 10 percent higher than in
the same period last year.
Meanwhile, corporate purchasing executives
said in a separate report released today that the
nation's manufacturing sector continued to
expand for the third straight month in April.
But the growth was less robust than in the
previous month, according to the survey by the
National Association of Purchasing
Management.
Some analysts speculate an economic
slowdown is coming.
However, economist Sung Won Sohn, with
Wells Fargo & Co. in Minneapolis, said, ''I
don't think this is it.
''The fact that consumers are willing to bring
the savings rate into the negative territory
indicates that they're not concerned about their
income and jobs,'' Sohn said.
Investors pushed up the Dow Jones average of
industrial stocks by more than 100 points this
morning, erasing an 89-point loss Friday.
Thursday's 10,878 close was a record.
With the nation's unemployment rate near a
29-year low, demand for labor is strong and
wages are rising -- by 0.3 percent in March.
Continuing solid stock market gains are also
lining many people's pockets. Interest and
dividend income rose in March, along with
rental incomes and business owners' incomes.
Farmers' incomes, however, declined. The
farm sector has been among the hardest hit by
a record U.S. trade deficit resulting from
economic hard times abroad.
Consumer spending on services jumped by 0.7
percent in March, offsetting a 0.7 percent drop
in purchases of durable goods, big-ticket items
expected to last three or more years. Spending
on nondurable goods, such as food and fuel,
increased 0.4 percent.
Spending on building new homes, which
consumers have been snapping up at record
rates, rose 2 percent in March after a smaller
increase in February. Spending was up on
construction of both single-family homes and
apartment buildings.
In a third report, the department said that in
1998 spending on work on existing residential
properties rose 0.8 percent, with two-thirds of
a total $119.5 billion spent on home
improvements, rather than maintenance and
repairs.
Spending on commercial construction fell 2.1
percent, a large drop, but not enough to wipe
out the huge 4.0 percent increase the month
before. Spending on office building projects
was up slightly, but was more than offset by
declines in industrial, hotel and retail
construction.
Government construction spending rose 0.3
percent, with highways, sewer systems and
water supply facilities leading the way. |
