“When the April figures are released, we’ll get a better sense of the direction of the economy and whether the March increase in personal income was just a blip or evidence of a positive trend,’’ said Susan Carley, a professor at Kennesaw State University’s Coles College of Business.
“Further improvement indicates that workers are bringing home more money which can lead to higher consumer confidence and potentially higher spending,” said Carley, who specializes in consumer behavior.
What to look for
"When the April figures are released, we'll get a better sense of the direction of the economy and whether the March increase in personal income was just a blip or evidence of a positive trend,'' said Susan Carley, a professor at Kennesaw State University's Coles College of Business.
"Further improvement indicates that workers are bringing home more money, which can lead to higher consumer confidence and potentially higher spending," said Carley, who specializes in consumer behavior.
Tough headwinds
What we earn determines what we are able to spend.
"As hiring has picked up in the last six months this component is growing at about 4.0 percent," said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
"Normality here will mean a 6.0 percent growth, tough to achieve given the headwinds [elevated energy prices, bond market uncertainty, inflation in emerging markets to name a few] that the economy is currently facing."
What is personal income?
It is your salary, tips, rent received, investment interest, dividends, welfare and veteran benefits. "Personal income is the income received by all persons from all sources," according to the federal government.
More to gas
We earned and spent more in March, but much of the extra money went toward gasoline.
In Atlanta, we paid $3.97 for a gallon of regular gas last week, over $1 more than what we paid a year ago ($2.78). A month ago, we paid $3.72.
Personal income rose 0.5 percent in March and consumer spending increased 0.6 percent, the Commerce Department reported.
But after adjusting for inflation, spending rose a much more subdued 0.2 percent and after-tax incomes were essentially flat in March.
What it means
Consumer spending is important because it accounts for roughly 70 percent of our economic activity.
If we are earning more , families may go on vacation rather than stay home, and eating out may be an option rather than packing your lunch.
Ultimately, "these expenditures could lead to increased hiring as employers work to meet higher consumer demand," Carley, the KSU professor, said.
Sources: Associated Press, staff research
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