Americans' personal income rose 0.5 percent last month and consumer spending increased 0.6 percent, suggesting a slight improvement in economic growth this quarter, economists said.
The increase in personal income was attributable in part to special factors last month, such as a pay raise for federal civilian and military personnel, cost-of-living adjustments for several federal pension and income programs and increases in tax rates and the taxable wage base for personal contributions for social insurance, the Commerce Department reported.
Additionally, a shift in the timing of payment of military retirement benefits and a large increase in December in retroactive Social Security benefit payments affected personal income in both January and December, Commerce said.
Without those special factors, personal income would have risen 0.1 percent in January and 0.7 percent in December.
Income rose 0.4 percent in December, Commerce said.
White House spokesman Larry Speakes said the figures released yesterday show "a continued moderate growth in personal income and consumer spending. These are positive signs as the economy moves into a new year of sustained growth."
Meanwhile, the Commerce Department reported that personal consumption expenditures rose 0.9 percent in November, 0.8 percent in December and 0.6 percent in January.
The increase in consumption expenditures bodes well for continued economic growth because consumer spending is the largest component of gross national product.
However, growth increased last month at a slower rate than in the previous two months.
Robert Ortner, Commerce Department chief economist, said that although the rate of spending has slowed, the level of spending so far is above the average during the fourth quarter.
Private wages and salaries grew at an annual rate of $1.8 billion in January, following a $15.2 billion increase in December.
Government wages and salaries rose $4.6 billion in January, compared with $1.6 billion in December, in part because of a 3.5 percent pay raise for federal civilian employes and a 4 percent rise for military personnel.
Total personal consumption spending rose $13.5 billion in January, following an $18.1 billion increase in December.
Purchases of durable goods dropped $1.6 billion in January, compared with a $9.1 billion increase in December.
Personal saving increased to an annual rate of $155 billion last month, following a rate of $154.9 billion in December.
The national savings rate, which is savings as a percent of disposable income, was 5.8 percent, compared with 6 percent in December.