- The Washington Times - Tuesday, April 30, 2002

ASSOCIATED PRESS
Consumers didn't shop until they dropped, but they help bolster the economic recovery by spending modestly in March.
The Commerce Department reported yesterday that consumer spending which accounts for two-thirds of all economic activity in the United States rose 0.4 percent in March, matching the growth in Americans' incomes, which include wages, interest and government benefits.
While solid, March's performance marked a moderation in spending and income growth from the previous month. In February, Americans' spending and incomes each rose by 0.6 percent.
"Consumers didn't falter," said Richard Yamarone, economist with Argus Research Corp.
Higher energy prices and rising unemployment which jumped to 5.7 percent in March probably made people more cautious in their spending, economists said.
The 0.4 percent rise recorded for Americans' spending and incomes in March was the smallest gain in three months.
How the recovery ultimately shapes up will depend on the behavior of consumers and a turnaround in business-investment spending, which dropped during the recession, Federal Reserve Chairman Alan Greenspan has said.
Consumers kept on buying throughout the slump, preventing the economy from sinking deeper into recession last year. As a result, there could be less pent-up demand coming out of the downturn, making for a less than sizzling rebound, Mr. Greenspan has cautioned.
Businesses, meanwhile, won't want to crank up investment until they are sure the recovery is here to stay and their profits, battered by the slump, get better, economists said.
The economy began to break out of the doldrums when it grew in the first quarter at a 5.8 percent annual rate, its strongest performance in more than two years. Consumer spending rose at a rate of 3.5 percent, contributing to first-quarter growth. But business investment in new equipment and plants was a source of weakness, falling at a 5.7 percent rate.
President Bush credits his $1.35 trillion tax cut last year with helping the economic comeback and now wants to make sure the recovery stays on firm footing.

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