FT: US Personal income shows surprise rise

From FT:

US consumers curbed their spending for the second month running in April, in spite of the first rise in income this year, as they continue to cope with the recession and fears of more job cuts.

Personal consumption expenditure fell by 0.1 per cent or $5.4bn last month, less than economists expected and a smaller fall than the previous month’s 0.3 per cent.

Incomes rose for the first time in four months in April, increasing by 0.5 per cent, or $58.2bn, and dashing predictions of another drop. Much of the increase, which was the largest in 11 months, was due to lower taxes and benefits from government stimulus payments.

Spending declines seem to be a new reality and will probably be a long term trend going forward. At least there has been a rise in income and that is always welcome.

Meanwhile the savings rate, which is measured as the proportion of income left after spending and taxes, rose from a revised 4.5 per cent in March to 5.7 per cent in April, a 14-year high. Economists predict that the savings rate could reach 8 per cent as household wealth has collapsed.

Savings rate is at 14 year highs and this may be another new reality, which is here to stay. Two bits of good news to start the month.

Disclaimer: Author is sneakily silent on the unemployment numbers.

3 thoughts on “FT: US Personal income shows surprise rise”

  1. Only problem is that the increase in income has nothing to do with anything positive that shows signs of actual improvement but rather even more “fictive and inflation increasing” money politics 🙁

    But it is nice to hear that people have learned to spend $1 less of every $1,000 (LOL). 🙂


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