Friday, June 27, 2003

Is the turnaround here?
American's incomes, including wages, interest and government benefits, rose by a modest 0.3 percent in May, up from a 0.2 percent advance in April, encouraging news because income growth is a main force behind future spending by consumers, economists say. The income and spending figures are not adjusted for price changes.
Let's take apart the data. Wage and salary disbursements rose just 0.2% for the month, "other labor income" 0.3%. The real winners were proprietor's income (i.e. profits of "closely held businesses") up 1.0%, transfer payments up 0.8% and dividend income up 0.6%.

Remember that wages and salaries actually fell in April, so a modest upturn is more a recovery than an upturn. So who was actually doing well in May? Old folks on Social Security, capitalists receiving dividends and corporate chiefs of privately held firms.

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