Americans' personal incomes rose 0.8 percent in April as higher employment and a longer work week gave a healthy boost to wages and salaries, the Commerce Department reported yesterday.
Incomes went up $20.2 billion to a seasonally adjusted annual rate of $2,679.1 billion, with increases in manufacturing payrolls accounting for one-fourth of the rise. The gain in manufacturing was the largest since August 1980.
Consumers stepped up their spending for the month by a full 1 percent, with most of the increase going for services.
Analysts said the substantial increases in both incomes and outlays indicated the economic recovery is steadily gaining ground.
"The economic upturn is becoming a cumulative, self-reinforcing process, where higher spending leads to higher production and then again to higher spending," said Commerce Undersecretary Robert Dederick, whose department compiled the report. "This is the stuff of which sustained business recoveries are made."
A number of forecasters expect disposable personal income--take-home pay, in effect--to go up nearly 7 percent during 1983. That would amount to about 3 percent after adjustment for inflation and various tax changes.
In April, wages and salaries rose at a $12.8 billion annual rate, compared with a $9.1 billion rate the month before. Proprietors' incomes went up at a $2.6 billion rate, while personal interest income and transfer payments climbed $2 billion and $2.4 billion, respectively.
The personal saving rate dipped from 5.8 percent to 5.7 percent for the month as a consequence of spending going up slightly more than disposable income. So far, personal saving has shown little tendency to go up despite the various tax cuts that the Reagan administration said would boost saving, and forecasters generally predict it will run no higher than 6 percent this year or next.
The increase in personal consumption spending at a $21.2 billion annual rate compared with a revised $16.3 billion rate increase in March. Originally, the March figure was estimated at $7.8 billion. Since the level of personal income was revised upward by only $300 million, to show a $14.9 billion increase, the higher spending level meant the estimated level of saving had to be revised downward. Thus, the reported level of saving declined at a $2.7 billion rate, to $130.2 billion, rather than increasing at a $4.9 billion rate as first reported.
Meanwhile, in Boston, Martin S. Feldstein, chairman of the Council of Economic Advisers, told a meeting of the National Association of Mutual Savings Banks that the recovery could be impeded by restrictions in other countries on American exports and growing budget deficits at home.
As for the federal budget deficits, he said, they will remain more than 5 percent of the gross national product "if there are no legislative changes." Deficits could be reduced by cutting non-defense spending, which he said has doubled in 20 years to 16 percent of the gross national product.
But Feldstein supported President Reagan's stand against new taxes this year, saying new taxes might retard the economic recovery