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0.6% Rise in Personal Income Paces Spending Climb of 0.3% : Personal Income Climbs 0.6%, Consumer Spending Rises 0.3%

March 20, 1986|Associated Press

WASHINGTON — Americans' personal income rose a healthy 0.6% in February while consumer spending was up 0.3%, the government reported today.

The Commerce Department said the gain in incomes followed a weak 0.1% January rise while the increase in personal consumption spending followed a 0.4% decline in January.

While both categories showed improvement, they were still well below the pace set in December.

The consumer spending increase was basically attributed to a swing in the weather. Unusually mild weather in January had sent utility bills down. In February, gas and electricity costs sprang back to more normal winter levels, which helped to push spending in the services category up at an annual rate of $16.3 billion last month.

This was the only area of strength in consumer spending as purchases of both durable goods, items expected to last three or more years, and non-durable goods fell for the second consecutive month.

Because of this weakness, analysts were likely to take little encouragement from the overall gain in spending last month. The big concern this year is whether consumer spending, which accounts for two-thirds of all economic activity, will continue rising.

Income growth was also affected by several special factors last month, including a big swing in subsidy payments for farmers, a pay raise for the military, the rise in Social Security taxes in January and the cost-of-living increases in Social Security benefits.

If these factors are removed, the increase in personal incomes was 0.4% in both months.

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