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| Economy |
| Consumer Spending Increases as Incomes Stagnate |
| 2010-03-30 |
| (Bloomberg) -- Consumer spending in the U.S. rose in February for a fifth consecutive month, a rebound that will require gains in employment to be sustained. The 0.3 percent increase in purchases matched the median forecast of economists surveyed by Bloomberg News and followed a 0.4 percent advance in January, Commerce Department figures showed today in Washington. Incomes were unchanged, falling short of expectations as winter storms hurt hiring and hours worked. Best Buy Co. and Nike Inc., which have reported higher- than-anticipated profits, are among companies that may keep benefitting as the emerging recovery gives Americans the confidence to buy. The pickup in purchases has caused the household savings rate to drop to the lowest level in more than a year, underscoring the need for more jobs to ensure the recovery is maintained. "Considering the circumstances, this is a fine performance with the job market still not strong," said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. "As the labor market comes back, we should see continued support from consumers." Stocks and commodities rose on signs the world's largest economy will keep growing and as concern waned over the Greek government's deficit. The Standard & Poor's 500 Index advanced 0.6 percent to 1,173.35 at 11:22 a.m. in New York. Median Forecast The median estimate of 70 economists surveyed called for a 0.3 percent increase in spending, after an originally reported gain of 0.5 percent the prior month. Projections ranged from no change to a 0.6 percent advance. The little change in incomes followed a 0.3 percent increase in January. The median estimate of economists surveyed called for a 0.1 percent advance. Wages and salaries were also little changed last month after climbing 0.4 percent in January. Payrolls fell by 36,000 workers in February and the workweek shrank as blizzards in the eastern part of the country caused some plants to temporarily close. The median forecast of economists surveyed anticipate the government's employment report on April 2 will show the economy created about 180,000 jobs this month, the most in three years. Because spending rose and incomes were unchanged, the savings rate fell to 3.1 percent last month, the lowest level since October 2008. 'Step Two' "Step one in lifting consumer spending was the lowering of the personal saving rate," Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said in a note to clients. "That's pretty much played out. Now for step two, we need to see a good, old-fashion advance of employee compensation. Hopefully, we will begin to see that in March with the rise in payrolls." Nike, the world's largest maker of athletic shoes, said this month that third-quarter profit more than doubled, beating analysts' estimates, as North America posted a sales increase for the first time in a year. Best Buy, the largest U.S. electronics retailer, last week reported fourth-quarter profit that exceeded analysts' estimates as the Richfield, Minnesota-based company boosted sales by cutting prices on flat-panel TVs and offering discounts during the holidays. Adjusted for inflation, spending also climbed 0.3 percent, the best performance since November. Price-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, fell 0.2 percent in February. |
| Posted by:Fred |
| #5 Some pent up demand being released. Eventually you have to replace your worn out things. Personally we held off on spending anything beyond necessities as long as we could. In February we bought clothes for the first time in a long time. All off the clearance rack however. |
| Posted by: whitecollar redneck 2010-03-30 20:58 |
| #4 BestBuy, the largest U.S. electronics retailer, last week reported fourth-quarter profit that exceeded analysts' estimates Duh. One of BestBuy's competitors (Circuit City) went out of business last year. |
| Posted by: Anguper Hupomosing9418 2010-03-30 19:06 |
| #3 It's a far cry from Morton's, Blackthorne Inn or the Hunter's Head, but try the seniors section at ihop. In and out for less than $20. including a generous tip and taxes. |
| Posted by: Besoeker 2010-03-30 08:04 |
| #2 In my area we're seeing more and more low cost restaurants, aimed at the elderly, ate at one yesterday 2 pork chops a salad, a largish spoon of Corn, Peas, Iced Tea and Rolls and cornbread 16 bucks and tax for two, we'll be going back. |
| Posted by: Redneck Jim 2010-03-30 04:59 |
| #1 I guess people realise that there's no point in saving what's going to become a worthless paper. |
| Posted by: g(r)omgoru 2010-03-30 03:15 |