News Column

Personal Income Rose in March, but Less Than Hoped

April 29, 2013
personal income

Consumers spent more in March even as their income rose less than analysts had projected, a mixed economic message to start a week that will end with the latest government unemployment report.

Consumer spending was up 0.2% last month, down from February's 0.7% rise, the Commerce Department said Monday.

But spending still was up, an unexpected improvement. The median estimate of economists surveyed by Bloomberg News was that spending would be flat.

The March increase in spending came despite personal income's rising just 0.2%., less than the 0.4% estimated by economists.

Consumers increased their spending without raiding their savings. The savings rate was 2.7% in March, the same as the previous month.

The new data provide a mixed picture before Friday's report on April employment. The larger-than-expected rise in spending is good news, but the lower-than-expected rise in personal income is not.

Amid fears of another spring slowdown, economists expect the government to report the economy added 150,000 net new jobs this month.

Such a figure would indicate a moderately growing labor market and would be a major improvement over the disappointing 88,000 net new jobs added in March.

Personal income had shot up 1.1% in February, helping offset a steep 3.6% decline in January.

Fears of the automatic tax increases that were part of the so-called fiscal cliff were a major factor in the volatility of those figures. Many companies paid bonuses and dividends in December to avoid tax increases, such as the rise in capital gains rate, that kicked in at the start of the year.

Those early payments reduced personal income in January.

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(c)2013 Los Angeles Times

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