Personal Income Up 0.1%; Spending Flat : Economy: Commerce Department report for October is ‘another signal that a recession has started.’
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WASHINGTON — Personal income inched up only 0.1% in October in the worst showing in more than a year, while spending was flat, the Commerce Department reported today.
The report “was another signal that a recession has started,” said Norman Robertson, chief economist at Mellon Bank in Pittsburgh. “The income figures were very, very weak.”
“This does not bode particularly well for a robust Christmas season for some retailers,” Robertson said, noting that most American families cannot afford to take on any more debt.
The $5.7-billion increase in income--to an annual rate of $4.7 trillion--follows gains of 0.5% in September and 0.3% in August, according to the department’s Bureau of Economic Statistics.
Personal spending, which has been fueling the domestic economy, was unchanged in October after advancing 0.9% in September and 0.8% in August, the department said.
A key component of the income category--wages and salaries--fell $9.3 billion after gaining $16.7 billion the previous month.
October’s 0.1% increase in income was the smallest since no change in August, 1989, and the month’s flat spending was the worst showing since showing no change in May, a government spokesman said.
The data were adjusted for seasonal factors.
In addition, the Commerce Department said disposable personal income, or income after taxes and other major obligations, edged up 0.1% in October after increasing 0.4% in September and 0.3% in August.
As the economic picture worsened, Americans managed to stash a bit more money into their savings accounts. The government figures show the rate of personal savings edged up to 3.9% of income after taxes in October from 3.6% in September.
But the savings rate remains far below other nations.
The overall report generally was worse than expected by many economists. The consensus was a 0.2% increase in both personal income and personal spending during October.
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