
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, October 1, 1993                   TAG: 9310010221
SECTION: BUSINESS                    PAGE: A-12   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

PERSONAL INCOME, SPENDING RISE; HOME SALES DROP

Americans' personal income rose strongly in August, an indication that the economy, while not in great shape, is at least doing better than during the first half of the year.

Sales of new homes, however, unexpectedly declined.

Incomes jumped 1.3 percent to a seasonally adjusted annual rate of $5.43 trillion, following rare back-to-back declines in the two previous months, the Commerce Department said Thursday.

It was the biggest rise in four months and a rebound from July, when incomes were depressed by crop and property damage from flooding in the Midwest and drought in the Southeast.

"I think we're on the verge of a breakout from the siesta we went into in the first half," said economist Robert G. Dederick of Northern Trust Co. in Chicago. "The economy's got some get-up, not a lot of go, but some."

"There's no recession on the horizon, but growth . . . will continue to be disappointing," said economist Norman Robertson of Carnegie-Mellon University.

Income gains - which largely track improvement in the job market - are crucial to the economy's future. They're the underpinning of consumer spending, which represents two-thirds of the nation's economic activity.

Personal spending rose a moderate 0.4 percent, to a seasonally adjusted $4.42 trillion annual rate. That was the fifth straight increase and the same as July's.

But Commerce also reported a 3.1 percent drop in sales of new homes to a seasonally adjusted annual rate of 616,000, the second straight decline.

Economist David Seiders of the National Association of Home Builders said the report doesn't square with other signs that housing sales have rebounded.

by CNB