Personal Spending Up More Than Incomes

Washington, DC, March 1, 2010--The commerce Department said that personal spending jumped by a larger amount than expected in January, although incomes didn't keep pace.

The Commerce Department said Monday that personal spending rose by 0.5 percent in January, slightly better than expected. But incomes edged up only 0.1 percent, significantly lower than the 0.4 percent gain that economists had expected.

The income gain was the weakest showing in four months. Consumer spending is closely watched because it accounts for 70 percent of total economic activity.

The 0.1 percent rise in incomes was below the 0.4 percent gain that economists had expected.

For the past two years, income growth has been held back by job losses caused by the worst recession since the 1930s. For all of 2009, personal incomes actually fell by 1.7 percent, the weakest showing since the Great Depression year of 1938, when incomes had fallen by 7.7 percent.

In January, after-tax incomes actually dropped by 0.4 percent, the biggest monthly decline since last July.