ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, December 24, 1996 TAG: 9612240075
SECTION: BUSINESS PAGE: B5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: ASSOCIATED PRESS
Americans' incomes and spending both posted healthy increases in November.
The Commerce Department reported Monday that personal incomes rose 0.5 percent last month, a solid rebound after showing no gain at all in October. Consumer spending also was up 0.5 percent.
The spending increase followed an 0.7 percent rise in October. Consumer spending is critical to the economy's overall health because it accounts for two-thirds of total economic activity.
David Wyss, economist at DRI-McGraw Hill, said he thought retail sales would be up about 5 percent - not a stellar year, but better than 1995, when sales rose only 3.5 percent, leaving retailers with a lot of unsold goods.
Cheryl Katz, senior economist at Merrill Lynch, said high consumer debt burdens and an expected slowing in employment gains will depress spending in 1997, but growth will be sufficient to keep the GDP rising around the 2.3 percent expected for all of 1996.
For November, wages and salaries, the key part of incomes, were rising at a rate of $22.5 billion, after having fallen by $4.9 billion in October. The number of people employed, the average number of hours worked and the average hourly earnings all showed increases.
The big increase in personal spending reflected strength in purchases of services, which analysts attributed to a big jump in utility bills because of unusually cold weather.
Disposable income, the amount left after paying taxes, rose 0.5 percent following a small 0.1 percent October gain.
Americans' personal savings rate, savings as a percentage of disposable income, held steady at 5 percent in November.
LENGTH: Short : 42 lines ILLUSTRATION: GRAPHIC: 1. graph - Personal Income APby CNB2. graph - Personal Spending AP