Personal Income And Consumer Spending Slow Materially In April - May 31, 2013
The economy is continuing to give off mixed signals. Thus, after the Conference Board had issued a strong reading on consumer confidence on Tuesday, the government then weighed in with weaker figures on revised first-quarter GDP growth and first-time jobless claims yesterday. Now, earlier this morning, the Commerce Department reported that personal income had shown no increase in April, while personal consumption expenditures had contracted by 0.2%.
Those figures showed some deterioration from March, when incomes had risen by 0.3%, while spending had gained a nominal 0.1%.
Meanwhile, the income pattern has been most volatile this year, reflecting, no doubt, the imposition of higher taxes and the move by some companies to pay their first quarter dividends late last year, so that holders would pay lower taxes on such disbursements.
Specifically, personal income soared by 3.0% last December, as dividend payments were accelerated, then tumbled 4.4% in January, in large part due to the earlier dividend payments and the jump in payroll taxes, as the two-year-long reduction social security tax withholdings ended. Incomes then rose 1.1% in February and by the aforementioned 0.3% in March.
As to spending, it also has traced a somewhat irregular path so far this year, rising by 0.3% in January, by 0.8% in February, and by the noted scant 0.1% in March before falling back, as indicated, by 0.2% in April.
As to specifics, the flattening out in income was, in part, a response to the fact that private wage and salary disbursements had increased by just $1.6 billion last month, following a stronger $16.3 billion gain in March. Other incomes also fell short of their comparable March levels in April. Taken as a whole, this was a disappointing pair of reports and suggest further that the nation's rate of economic growth likely will slow in the current quarter relative to the opening period of this year.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.