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Mixed Messages on the Economy

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A recent Commerce Department study is sending mixed messages to U.S. businesses, as the report shows a growth in the nation's personal income but a decline in consumer spending growth for the month of April.

The total income received by individuals, before taxes and not adjusted for inflation, increased 0.7 percent or $69.1 billion in April. This was a substantial jump from March's 0.5 percent ($47.3 billion) increase in personal income.

Unfortunately, having more money on hand did not lead consumers to increase their personal spending. Personal consumption expenditures, the measure of consumer spending, increased 0.6 percent in April, down from a 0.9 percent increase in March. In dollar figures, April's $53.6 billion increase in personal spending was a noticeable downturn from March's $73.5 billion increase. The bulk of April's increase occurred in the non-durable goods sector.

A closer look into personal income growth shows some discrepancy between the salary and wage increases of certain industries. For example, goods-producing industries' payrolls increased $6.9 billion in April after a $1.8 billion increase in March. But manufacturing saw a considerable shift in their payroll numbers as April had a $3.6 billion increase compared to a decrease of $1.1 billion in March. The service industries had a $32.4 billion increase in payroll in April, doubling March's $14.7 increase.

Last updated: May 27, 2005




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