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Consumer Spending, Personal Income Up

 

March 31, 2005 -- With temperatures beginning to climb, the U.S. economy also showed signs of warming up as consumer spending jumped 0.5 percent and personal income increased 0.3 percent for the month of February, according to the U.S. Commerce Department.

Brian Headd, an analyst at the Small Business Association, said that while it is difficult to determine exactly how these figures will affect small businesses, the improved figures are an optimistic sign. "Right now we can't say that 'x' amount of this spending increase went to small businesses, but it is fair to say that as the economy goes, so goes small businesses," he said.

The data showed a jump from January's much smaller 0.1 percent increase in spending and a 2.5 percent drop in income that was attributed to a one-time fallout following Microsoft's massive dividend in December. February's 0.3 percent increase in income can be linked to a 262,000 surge in new jobs, the biggest increase in four months.

Headd warned, however, that the figures, while encouraging, should be viewed with caution. "They don't offer an extremely clear picture of what is going on. After all, one month's data can't really be called a trend."

Less rosy news came from the Department of Labor that reported the number of Americans filing new claims for unemployment benefits rose by 20,000 to 350,000 last week. This marked the highest level in 11 weeks.


Kasey Wehrum

Staff writer Kasey Wehrum has written for Inc. magazine on subjects ranging from the businesses behind professional bull riding to gadget inventor and father of the infomercial, Ron Popeil. His work has appeared in the New York Times, Worth, Budget Travel, and on MSNBC.com. He lives in New York City.