Personal Income and Spending Edge Up

Americans’ personal income rose a tiny 0.2% in March, half of the February rate, while the growth in consumer spending also edged up a slight 0.3%, the government reported Friday.

Economists said the Commerce Department report was further evidence of sluggish economic growth, although many said they detected evidence in the numbers that stronger growth was on the horizon.

The March income increase was down from a 0.4% gain in February, but the government said income growth would have been 0.3% last month without an unusually large decline in government subsidy payments for farmers.

The 0.3% rise in spending followed a 0.4% increase in February and a 0.4% decline in January. Consumer demand has been weak all year, primarily because of a slump in auto sales.

Some analysts argued that both the income gain and the spending increase were actually stronger than they appeared because inflation was running at such a low rate during this period.

The report on March consumer spending said purchases of durable goods--items expected to last three or more years--plunged at an annual rate of $9.6 billion, the second big monthly decline, reflecting the drop in auto sales. Sales of non-durable goods rose at a fast annual clip of $13.6 billion, providing the strength to push total spending up.

On the income side, wages and salaries rose at an annual rate of $9.6 billion in March, an improvement over a $6.9-billion February rise as manufacturers’ payrolls grew.

Personal earnings on interest fell $1 billion in March, reflecting the drop in interest rates this year.

Farm incomes declined $7.5 billion in March because of a big drop in government subsidy payments.

Disposable, or after-tax, personal incomes rose 0.3% in March following a 0.5% February increase.

The personal savings rate--savings as a percent of disposable income--edged down to 4.2% from 4.3% in February.