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This Month’s Economic Update: Inflation Up, Income Holds

In this month’s trickle of economic data comes a little good news for the market, even if it’s perhaps not great news for people’s bank accounts: Consumer

Jul 31, 202012.9K Shares499K Views
In this month’s trickle of economic data comes a little good news for the market, even if it’s perhaps not great news for people’s bank accounts: Consumer spending was up even as incomes were flat in February. Spending wasn’t up by much — just .3 percent — but the fact that it rose even as wages remained flat indicates that people feel more secure spending money they don’t necessarily have.
Economists have long said that consumer spending needed to rise to encourage businesses to invest in new employees.
In somewhat less heartening data that may belie the idea that consumer confidence rose with spending, consumers spent that extra money on food and clothes rather than durable goods like cars or appliances. Worse yet for consumers, the good economic news sent oil prices up, which could drive inflation up for March.
Although unemployment figures for March won’t be available until later in the week, economists expect the unemployment rate to hold steady at 9.7 percent despite the addition of up to 200,000 jobs. There may or may not be pent-up demand in the market causing the rise in consumer spending, but that demand has yet to be reflected in the labor market.
Paula M. Graham

Paula M. Graham

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