Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 2, 1994 TAG: 9412020042
SECTION: BUSINESS PAGE: A15 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
A flurry of reports Thursday points to a remarkably strong economy with ``no dark clouds,'' said one private analyst.
A day after reporting that the economy expanded in the third quarter more rapidly than earlier estimates, the Commerce Department released data that suggest the fourth quarter got off to a quick start.
Americans' income surged 1.4 percent in October, the biggest jump in eight months and the ninth straight gain, the department said.
With millions more Americans employed and being paid more, analysts expect a strong Christmas shopping season that got off to a brisk start last week.
Spurred by a big gain in average hourly earnings and bonus pay for auto workers, the income advance easily outpaced consumer spending - which rose 0.7 percent in October for its strongest showing since a 0.9 percent rise in August.
``These are very strong numbers,'' said economist Eugene Sherman of the Wall Street firm of M.A. Schapiro & Co. ``It's a very positive figure on the income side, so much so that people saved more money. And you know how much Americans hate to save.''
``Everything is doing remarkably well,'' he added. ``There aren't any dark clouds.''
In other reports:
Construction spending rose 0.9 percent in October, the second straight gain, although the advance was limited to nonresidential and government spending. The Commerce Department said residential spending, nearly half of construction outlays, fell.
American manufacturing surged in November to its strongest level in 10 years and its 15th straight month of growth, said a widely followed survey by the National Association of Purchasing Managers.
The Commerce Department said the income gain was the largest since it rose 1.7 percent in February. Income last fell in January, when it slipped 0.6 percent. In September, personal income increased 0.6 percent and spending rose 0.2 percent.
Disposable income - income after taxes - also climbed 1.4 percent in October.
Americans' savings rate - savings as a percentage of disposable income - rose to 4.7 percent in October, from 4.1 percent the previous month. The rate is the highest since April 1993, when it was 5 percent.
Consumer spending, which accounts for two-thirds of the nation's gross domestic product, was up for the sixth straight month and eighth of the last nine.
Private wages and salaries, the most closely watched component of income, increased at a $45.6 billion annual rate in October compared with an $18.5 billion rise in September. It was the biggest jump in that category since April 1993, when private wages soared at a $92.5 billion rate.
The Commerce Department said incomes in October also were boosted by a big jump in subsidy payments to farm owners. But even excluding that factor and the bonus pay in the auto industry, personal income rose 1 percent.
The income and spending figures were not adjusted for inflation. When adjusted, disposable incomes rose 1.3 percent in October, while spending was up 0.6 percent.
by CNB