Personal incomes increase again

July's 0.2% rise means more spending, economic expansion

The economy

August 28, 1999|By BLOOMBERG NEWS

WASHINGTON -- U.S. personal incomes rose for the seventh straight month in July, enabling consumer spending to keep growing and push the economy toward its longest expansion ever, government figures showed yesterday.

Incomes grew 0.2 percent in July after rising 0.7 percent in June, the Commerce Department said. Spending rose 0.4 percent after a gain of 0.3 percent a month earlier.

The July increase in income was the smallest since the end of last year because federal disaster payments had swollen farmer income in June. Personal incomes rose 0.5 percent last month, the same as in June, when farmer income is excluded.

"The economy will continue to grow with limited interruptions," said Richard Yamarone, a senior economist at Argus Research Corp. in New York. If growth continues through January, the expansion will be 107 months old and the longest in U.S. history.

Pay gains at factories helped bring about a 0.7 percent increase in wages and salaries, which account for about 60 percent of income. That was the biggest increase since January, and the consequent spending helped the nation's retailers.

The July gain in wages and salaries reflected a 0.8 percent surge at manufacturers, where pay tends to run higher than service-producing jobs.

Last month's rise in factory wages was the strongest since a 1.2 percent jump in August 1998, government figures showed.

Total personal income would have been higher had farm income not declined bymore than half. Disaster payments caused income to bulge the previous month.

The increase in consumption was paced by a 0.6 percent rise in spending on utilities and other services, "as air conditioning use was boosted by the summer heat wave which enveloped much of the country," said Marilyn Schaja, a money market economist at Donaldson, Lufkin & Jenrette Securities Corp. in

New York. Spending on durable goods was boosted by demand for autos, analysts said. Sales of cars and light trucks rose to 17.1 million units at an annual rate in July, up from 17 million units in June, automakers reported earlier this month.

The nation's savings rate came in at minus 1.4 percent compared with minus 1.1 percent in June.

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