Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 31, 1992 TAG: 9201310212
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
INCOMES RISE - IF YOU COUNT JOBLESS BENEFITS
Consumer spending, a vital component to economic recovery, inched up just 0.3 percent in December, the government reported Thursday. Analysts said the report suggests the new year is beginning without any momentum.The Commerce Department said consumer spending increased 3.9 percent during 1991, down from 6.4 percent a year earlier.
The department also said personal incomes jumped 1 percent, but half of that increase was due to special payments including unemployment insurance for workers who lost their jobs in the weakened economy.
"No wonder confidence in the economy is declining," said Paul Sarbanes, chairman of the congressional Joint Economic Committee. "Not even the very serious recessions of 1974-75 and 1981-82 saw this kind of income decline."
Sarbanes, a Maryland Democrat, said that on a per capita basis, disposable incomes fell on an annual basis for just the second time since World War II.
For the year, incomes increased 3.3 percent, less than half the 6.8 percent advance in 1990 and barely beating a 3.1 percent increase in inflation.
The data "indicate that economic growth is essentially stagnant," said economist Marilyn Schaja of Donaldson, Lufkin & Jenrette, a New York securities dealer.
The small boost in spending, she observed, was concentrated entirely in the service sector. Purchases of goods declined.
"There's no upward momentum in consumption," concurred Larry Meyer of Laurence H. Meyer & Associates, a St. Louis economic forecasting service.
Personal consumption totaled $3.95 trillion at a seasonally adjusted annual rate, up from $3.94 trillion a month earlier. Incomes totaled a seasonally adjusted annual rate of $4.92 trillion, up from $4.87 trillion in November and the biggest increase since a 1.3 percent gain in January 1989.
In addition to the unemployment insurance payments, the rise in incomes was affected by increases in farm subsidy payments and a bonus for auto workers.
Disposable incomes - incomes after taxes - rose 1.1 percent, the largest increase since a 3.3 percent advance, also in January 1989. Disposable incomes had slipped 0.2 percent a month earlier.
A key component of the income category - wages and salaries - increased $18 billion after gaining $2.7 billion in November.
Americans' savings rate jumped to 5.8 percent in December, up from 5 percent a month earlier. Americans' savings rate for the year was 5.3 percent, up from 5.1 percent in 1990.
The income and spending figures were not adjusted for inflation. When adjusted, disposable incomes rose just 0.8 percent and consumer spending was unchanged from November.
Spending on services increased $13.5 billion in December after rising $18.8 billion in November.
But spending on durable goods - usually expensive items expected to last more than three years - fell $400 million on top of a $3.0 billion loss the previous month. Spending on non-durable goods dropped $1 billion, adding to a $400 million loss a month earlier.