Americans Are Earning More Money And Spending More Money

by Stephan Smith on October 7, 2010

Though U.S. employment growth is suppressed in the United States for the time being, those who are employed in the United States, on average, are making more money and spending more money during the month of August 2010 according to the Bureau of Economic Analysis [BEA].

Income

Money TreePersonal income increased by 59.3 billion dollars  during the month of August 2010 and increased by 0.5 percent over the previous month [July ’10 – August `10]. Overall private wages increased by 26.1 billion dollars and government wages increased by 5.2 billion dollars. With Americans earning more money, people will be comfortable spending more money, which in turn will help the U.S. economy. So that is good news.

Consumption

Personal consumption expenditures [PCE] increased by 41.3 billion dollars in August 2010 and increased by 0.4 percent over the previous month [July ’10 – August `10]. The PCE Spendingnumber is interesting because the PCE is generally used to help measure price movement in goods and services. But with the consumer price index being at low levels, the PCE could be suggesting that Americans are spending more money on more goods and services rather than spending more money on the same amount of goods and services. Whatever the case maybe, Americans are spending more. On a side note: Americans have saved 661.9 billion dollars during the month of August 2010 which is 11.9 billion dollars more than what was saved in July 2010.

Additional Commentary

News Boy

This report is good news for the U.S., but it is far from enough. The U.S. needs consecutive reports like this or better if the U.S. is to continue to recover from its crisis. The Federal Reserve [FED] has been hinting at performing another round of quantitative easing [QE] to helpstimulate the economy further if the economy continued its stalled recovery. Whether this report is consider good enough to postpone or eliminate the FED’s second QE policy remains to be seen. Unfortunately, chances are the FED will start QE by the end of the 2010.



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