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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (40113)	7/2/2001 10:24:54 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

The slower economy is finally resulting in a slowdown of personal income growth. For the second consecutive month personal income growth was just 0.2%. Accounting for inflation, income rose by just 0.1% following 0% growth in April. The main culprit was wage and salary income, where a rise in the service-producing industries barely offset a second consecutive monthly decline in manufacturing wages and salaries. Consumers continue to spend, however, as if income growth were stronger. Despite the weak economy, consumer spending has risen each month of this year. The 0.5% growth in April and in May was the strongest since a 1.1% increase in January. This spending spree took the personal saving rate back to the record low -1.3% that was reached in January and eliminates any indication that consumers are slowing their spending ways and trying to rebuild savings. With ample lines of credit, including home equity credit available to the record number of homeowners nationwide, it is easy to see how households are striving to maintain their standards of living in a weaker economic environment. But household debt service burdens are beginning to rise, as are consumer loan delinquency rates, so households cannot be expected to continue to spend at this same pace. Indeed, with income growth now slowing to the 0.2% range month to month, summer spending may cool sharply. The last time consumer spending slowed unexpectedly was during the Christmas holiday season following two very weak months of income growth in October and November. These data on personal income will not be good news for Wall Street, which is depending upon consumer spending to prop up the economy until business investment rebounds. This makes the upcoming federal tax rebates appear all the more perfectly timed to support consumer spending just as income growth begins to fade away.