http://money.cnn.com/2013/03/29/news/economy/personal-income-spending/index.html?iid=SF_E_Lead
According to a recent government data release, personal incomes rose 1.1% in February after a drastic drop in January. The Commerce Department also said spending rose 0.7%.Both of these figures are surprisingly better than expected. There was a consensus among the economists that incomes would only rise 0.8% while spending would increase 0.6%. One thing does not seem to add up is that despite suffering from higher payroll taxes, personal incomes continued to increase. However, one plausible explanation is that it the effects of increased payroll taxes have yet to be seen meaning it might be just a matter of time until personal incomes take a big bit.
This seems in line with our discussions in class that state that personal income would fluctuate more than spending and that investment would fluctuate more than both of them.
ReplyDeleteThis is also a signal for better economic performance but in light of the future payroll taxes I feel like the anticipated growth might receive a slowdown.