Personal income rose 0.5% in August, the largest increase this year, while spending by individuals remained steady, according to a government report released Friday.
Personal income increased $59.3 billion, or 0.5% last month, the Commerce Department said. That's more than the 0.3% rise economists expected.
This rise in income and spending is a good thing for the US economy, but Robert Dye states that the rise in income is mostly from an increase in agriculture revenue and unemployment benefits. In this case, this is still helpful for the economy because it gives the US economy consistency in with income staying around a .5% increase and it helps the scare of another recession occurring.
ReplyDeleteI agree that this might help reduce the scare of a double dip recession but how is it good if the government, which is already is severe debt, increases UI- doesn't this mean that unemployment levels are still high? And also only one sector of economy is receiving higher income!
ReplyDeleteAlso, if this continues how is the government going to stop the bush tax cuts if people are not earning enough through salaries and wages but through UI?
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ReplyDeleteIt seems like the article is trying to depict a positive trend in the U.S economy. However, influential factors such as level of investment and budget deficit have not been addressed. Unemployment insurance is only a temporal benefit (its duration actually varies from state to state as shown by the following website: http://money.cnn.com/news/storysupplement/economy/unemployment_benefits/index.html)
ReplyDeleteBy the time the incoming holiday sales are over, not much will be left of individual incomes. Increased consumer spending might curb chances of a double-dip recession for a while but the main problems that need to be addressed are the relatively high unemployment rate and the governmental budget deficit.
It may be a good sight that there's an increase in consumer spending. However, let's not let those number dilute our vision since most of the spending from agriculture, which is seasonal and unemployment benefits, which is totally dependent on the government spending. Thus, at the level where government budget is draining out, we cannot expect these source of spending to last longer. in addition to that, just to refer to Vanisha, by the time the incoming holiday sales are over, not much will be left of individual incomes.
ReplyDeleteWhat can we assume that's happening to interest rates? Can it be that Interest Rates are high because as personal income is increasing, so is consumer saving?
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