Friday November 26, 9:13 am Eastern Time
FOCUS-U.S. personal incomes soared in October
(Adds analysis, market reaction in paragraphs 6-7, 10-11)
By Glenn Somerville
WASHINGTON, Nov 26 (Reuters) - Americans' incomes shot up at the strongest rate in 5-1/2 years in October, boosted by farm subsidies, union signing bonuses and a bounceback in rental incomes from a September setback caused by the damaging impact of Hurricane Floyd, the government said on Friday.
The Commerce Department said personal incomes swelled 1.3 percent last month to a seasonally adjusted annual rate of $7.941 trillion after being flat in September.
It was the sharpest rise in incomes since a matching 1.3 percent jump in April 1994. Spending grew by 0.6 percent to a $6.379 trillion annual rate after a 0.5 percent September rise.
But, without the special factors, personal incomes were up 0.5 percent in October and rose 0.3 percent in September, Commerce said.
Wall Street economists had forecast October incomes would increase more mildly by 0.6 percent and that spending would rise by 0.3 percent.
Harvinder Kaliraj, an analyst at IDEAglobal.com in New York, said strong gains in spending implied the economy will continue to benefit from robust consumption ahead.
``It looks like we're on track for another quarter of strong personal consumption growth,' he told Reuters Television.
Consumer spending accounts for two-thirds of national economic activity and was a key factor in the booming 5.5 percent annual rate of growth for the third quarter reported by the Commerce Department on Wednesday.
In Friday's report, the department said government subsidies for farmers added $41.4 billion to personal incomes while bonuses in union contracts in manufacturing industries were worth $5.9 billion and landlords and store owners' incomes that were depressed by hurricane damage in September began to recover.
Financial markets, quiet after the Thanksgiving Day holiday and set to close early on Friday, were little affected by the latest economic data.
The bellwether 30-year U.S. Treasury bond had started the day with a small loss due to softness in the dollar and remained down modestly after the income and spending figures were published.
The report said savings increased in October to an annual rate of $154.7 billion, or 2.3 cents out of each dollar earned. That was up from 1.5 cents saved in September.
Wages and salaries gained 0.6 percent to an annual rate of $4.556 trillion in October from $4.526 trillion in September. As well, income from rentals, which suffered in September when the hurricane swept up the East Coast, soared 17.1 percent to $152.4 billion from $130.2 billion in September.
biz.yahoo.com
WAges go up fueling the inflation fears and teh Bond correctly identifies this as bad. The Manic Glue sniffing NASDAQ on teh other hand which holds some of the highest PE stocks that will be most hit by inflationary pressure and high interest rates soears to a new high. UFB!
Good Luck,
Lee |
