A day after the government posted data showing virtually no economic growth for the first three months of 2014, new indicators Thursday gave reason to think that the economy is in better shape than the growth numbers suggested.
The most heartening new indicator was the Commerce Department’s measure of personal income, which the agency reported rose by 0.5 percent over the prior month and personal spending increased 0.9 percent over March numbers.
“Personal income growth was strong, while spending growth was even stronger, sending the saving rate lower,” said Chris Christopher, U.S. economist for forecaster IHS Global Insight, adding the growth in income will wash across the economy. “Spending was significantly robust in most major categories. It’s clear that many Americans headed out to the shopping mall and automobile dealerships in March after staying home and cranking up the heat for the first two months of the year.”
He added, “Looking ahead, we expect consumer spending, income, and confidence to be significantly stronger in 2014 than in 2013.”
The strong income and spending data comes on the heels of another Commerce Department report on Wednesday that showed the economy grew at an annual rate of just 0.1 percent from January through March. Many economists think that number will be revised upwards on May 29 because other economic indicators showed a flurry of activity in March as the brutal winter loosened its grip on many parts of the nation.
Another good sign for the economy came Thursday came with release of the Institute for Supply Management’s purchasing managers’ index. It showed a steep monthly rise, driven up in part by new manufacturing employment. That’s a good sign for Friday’s release of employment data by the Labor Department.
The monthly jobs report for April is expected to show continued healing in labor markets. A private-sector gauge of payroll employment_ the ADP National Employment Report_ showed strong gains Wednesday for April hiring. But the weekly Thursday report from the Labor Department on first-time claims for unemployment jumped unexpectedly by 14,000 for the week ending April 19th.
On another down note, the Associated General Contractors of America, in an analysis of new monthly data from the Census Bureau, warned Thursday that wrangling in Congress over funding for federal highways threatens to depress an already struggling construction market.
“Total construction spending remained in a holding pattern in March as strong gains in apartment construction and modest growth in home building and private nonresidential activity offset falling public outlays,” the group said in a statement.
By Kevin G. Hall
McClatchy Washington Bureau