Personal incomes rose by a modest 0.4 percent in November, but consumption -- led by auto purchases -- climbed by a much stronger 1.2 percent, the Commerce Department reported yesterday.
The rise in incomes may not have been enough to offset price increases during November, analysts said. The consumer price index for November is due to be released today.
However, Commerce Secretary Malcolm Baldrige said the "solid" increase in consumer spending "was a good start for the holiday selling season." Economists have been waiting for a revival in consumer spending to pull the economy out of recession. There are now some signs of improvement in the economy, suggesting that "a little upturn is here," Otto Eckstein of Data Resources Inc. said yesterday. But the continued weakness in personal incomes leaves little room for a major improvement in spending, he said.
The recession is taking its toll on wages and salaries. These actually declined by $2.5 billion in the private sector in November, following a $2.8 billion decline in October, yesterday's report said. Manufacturing industry was hardest hit, with a drop of $2.3 billion in payrolls, after seasonal adjustment. This was less than the $4.3 billion decline in October. "Manufacturing payrolls have declined in nine of the past 12 months and are now 3.6 percent below the November 1981 level," the report said. Durable industries, which are more sensitive to economic conditions, have seen a 6.7 percent decline in the last year.
Unemployment benefits, Social Security payments and other government transfers have bolstered personal incomes, the Commerce Department said. This category of income rose by $7.2 billion in November compared with a climb of $8.7 billion in October.
Another area of income growth was in government wages and salaries, which increased by $1.5 billion last month, the Commerce Department report said.
Consumers apparently have been saving less to keep up spending, despite the sluggish growth in incomes. "The saving rate fell back to 5.8 percent in November from 6.5 percent in October," Baldrige said.
This helped to support a $23.4 billion climb in personal consumption in November compared with $6.2 billion in October. The jump in auto sales in November, when dealers unloaded a lot of 1982 models, pushed up purchases of motor vehicles and parts by $16.7 billion in the month after a $8.5 billion decline in October, the Commerce Department release said. Durable goods sales overall rose by 7 1/2 percent, with nondurable goods and services up only 0.3 percent in the month.
However, many analysts question whether these gains can be maintained. "Without income growth it is really hard to see why consumers should get exuberant," Eckstein said.
The Commerce Department has revised downward the earlier figures for incomes, as well as reporting only a modest increase for last month, he pointed out.