Big Surge in Farm Subsidies Boosts Personal Incomes 1.7%

Americans’ personal incomes shot up 1.7% in October as a big surge in government subsidy payments nearly doubled farm incomes during the month, the Commerce Department said today.

In other positive economic news, a real estate trade group reported that sales of existing homes climbed a surprising 3.2% in October, the biggest increase in five months.

The increase in incomes matched the monthly advance in July, 1981. Personal incomes have not posted a steeper rise since June, 1975, when they went up 2.5%.

The government said the huge jump in incomes came while consumer spending was flat, showing no improvement after a slight 0.3% decline in September.

The figures for October are likely to be considered inconclusive regarding the effects of the stock market collapse since they were influenced primarily by big swings in other elements, notably farm incomes and declines in car sales.

The rise in personal incomes occurred mainly because farm incomes shot up 90.7% to an annual rate of $71.7 billion in October. That was due to a big jump in government subsidy payments, which vary dramatically from month to month.

Analysts were at something of a loss to explain the increase in home sales, which came during a period of rising mortgage rates.

The National Assn. of Realtors said sales of existing single-family homes rose to a seasonally adjusted annual rate of 3.56 million units last month after a 1.2% advance in September. The increase was the largest since a 5.8% advance in May.

Economists for the association said the rise in sales was evidently propelled by determined buyers who switched to adjustable-rate mortgages as interest rates were increasing. These mortgages offer lower initial rates and are often used during periods of sharp increases in fixed-rate mortgages.