Incomes, Durable Goods Gain in December : Economy: Analysts cite the latest reports as evidence that the recovery is gaining steam. But a lack of job growth remains a problem.

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From Associated Press

In further evidence that the economic recovery is gaining momentum, orders for durable goods shot up 9.1% in December--the largest increase in 17 months--while personal incomes grew 1%, the government said Friday.

“All in all, the expansion is gaining steam,” said David Jones, an economist with Aubrey G. Lanston & Co., a New York securities dealer.

Economist Lynn Reaser of First Interstate Bancorp in Los Angeles agreed. “The expansion appears now becoming quite broad-based--consumer spending, housing, capital goods and exports, at least to certain parts of the world,” she said.


The Commerce Department said the 9.1% advance in orders for durable goods--items such as trucks and turbines expected to last more than three years--was the largest since a 12.1% surge in July, 1991.

It helped boost purchases for the year by 4.1%, the first annual gain since a 2.8% increase in 1989 and the largest since a 9.6% jump in 1988. Orders fell 4.9% in 1991 and 1.3% in 1990.

Orders totaled $134.5 million in December, up from $123.3 billion in November and the highest level since orders totaled a record $134.8 billion in December, 1988.

The reports followed by a day the government’s announcement of a stronger than expected 3.8% annual growth rate in the gross domestic product for the fourth quarter of last year.

Still, many analysts believe that the recovery will slow without further job and income growth.

In fact, White House Press Secretary Dee Dee Myers called the recent economic reports encouraging news, but added: “There are still signs of long-term trouble. There has been no recovery in jobs. This has been a recovery without job growth.”


Nevertheless, the Commerce Department said in a second report Friday that the 1% increase in personal incomes in December helped boost earnings for the year by 4.7%. That was the biggest yearly increase since a 6.5% advance in 1990. Incomes grew a meager 3.5% in 1991.

At the same time, the report said consumer spending increased 5.3% in 1992, including a 0.5% gain last month. That was the biggest annual gain since consumption rose 6.4% in 1990. Spending was up just 3.7% in 1991.

In the durable goods report, gains were posted in all major categories, including a 20.8% jump in transportation orders.

The report said more than half of the transportation advance was in aircraft purchases. Excluding the transportation category, orders still rose 5.5%.

“Even if you take out the usually volatile transportation orders, we see the prospects for accelerating growth in the coming months--growth where its most needed, in production and employment,” Jones said.

First Interstate’s Reaser also pointed to a 0.4% increase in unfilled orders, which she called a “very positive sign for the manufacturing sector.”


“If orders continue to increase and unfilled orders start to edge up, I think manufacturing companies will be reaching the point very soon where they will start to add on to payrolls very gradually,” she said.

Personal Spending Trillions of dollars, seasonally adjusted annual rate Dec., ‘92: 4.20 Nov., ‘92: 4.18 Dec., ‘91: 3.96 *

Durable Goods New Orders Billions of dollars, seasonally adjusted Dec., ‘92: 134.5 Nov., ‘92: 123.9 Dec., ‘91: 113.9 *

Personal Income Trillions of dollars, seasonally adjusted annual rate Dec., ‘92: 5.19 Nov., ‘92: 5.14 Dec., ‘91: 3/96