• Personal Spending Rises, Worker Pay Increases

    Personal Spending Rises

    Consumer spending, a significant economic generator that takes on even more importance during volatile periods, rose 1.1% from the prior month in March, the Commerce Department reported Friday.

    The spending increase came as disposable income rose by $89.7 billion, or 0.5% more than February’s tally, the department said. The income measure includes wages and government assistance.

    Personal expenditures rose by $185 billion during March, as consumers spent more on dining and travel, among other services, but less on durable goods such as automobiles.

    Commerce officials said spending trends also reflected rising prices for goods and services, especially gas and groceries. The department’s March price index tied to consumer spending showed an overall 6.6% increase from a year ago, as energy prices rose 33.9% and food prices climbed 9.2%.

    The government earlier in the week reported that consumer spending was among the few bright spots as U.S. gross domestic product shrank during the first quarter on an annualized basis for the first time since the early months of the pandemic in 2020.

    Worker Pay Increases

    Income and spending are fueled largely by wage growth, and U.S. worker pay and benefits rose 1.4% during the first quarter, contributing to a growth pace of 4.5% for the year ended March 31.

    That’s the highest annual growth rate in 20 years, according to Labor Department data, as the first quarter topped the year-over-year growth of 4% seen in the fourth quarter of 2021.

    The department reported Friday that compensation costs for private industry workers rose 4.8% over the past year, while costs for state and local government workers increased 3.2%.

    The trends come as employers in many industries are boosting pay and benefits to attract and retain workers, after what was known as the “Great Resignation” spurred by work-from-home preferences and other shifts in worker priorities brought about by the pandemic.

    Source: www.CoStar.com