U.S. Personal Income Climbs 0.5% in June : Housing Starts Rebound With 1.9% Gain in Month

Associated Press

Americans' personal income rose 0.5% last month in what analysts viewed as another signal that the economy, while far from booming, is not poised for a nose dive.

Also in line with that scenario was a separate Commerce Department report Wednesday that showed housing starts climbing a modest 1.9% in June after a sharp drop in the previous month.

"Kind of even-keel reports," said Michael K. Evans of Evans Economics in Washington.

"It's no real positive news, no real negative news," said Jeff Shapiro of Wharton Econometrics in Philadelphia.

Although most economists had been expecting a slightly larger increase in the personal income figure, they noted that the 0.7% increase in private wages and salaries was somewhat stronger than the overall figure.

The broader gauge includes farm and interest income--factors that analysts say do not play a large role in the personal economic decisions of most Americans.

Indeed, personal spending was up smartly for the third straight month--by 0.6% in June following an identical spurt in May and a 1.2% jump in April. Both the April and May spending figures were revised upward in Wednesday's report.

"Income looks rather poor, but consumer sales look rather good," said David Wyss of Data Resources Inc. in Lexington, Mass. "On net, they balance out."

Noting the respectable gain in wages and salaries, Wyss said continuing declines in farm income are becoming more of a factor in the bottom-line personal income measure.

"Even though farming has been doing so badly for so long, they're finding ways of doing even worse," he said.

June's 0.5% rise in personal income came after a revised 0.5% decrease in May and a 1% increase in April.

Although the overall figure on housing starts, including apartment and condominium buildings, was up slightly, starts for single-family homes were down 1.3%.

"I'm disappointed and somewhat at a loss to explain why we didn't get a bigger response on the part of builders to the drop in mortgage interest rates," said James Christian, chief economist for the U.S. League of Savings Institutions.

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