January 31, 1995 in Nation/World

U.S. Income Growth Exceeds Spending

From Staff And Wire Reports

Americans’ income is growing more rapidly than spending, leaving analysts to wonder how soon an anticipated economic slowdown will materialize.

The Commerce Department reported Monday that personal income rose a healthy 0.8 percent in December to $5.89 trillion, after a rare drop the previous month. Earnings for 1994 were up 6.1 percent, the biggest gain in four years.

Meanwhile, spending climbed 0.3 percent to $4.75 trillion last month. It rose 5.7 percent last year, compared with 5.8 percent increase in 1993, and was the smallest advance since a 3.8 percent rise in 1991.

The figures “tell us what we already know,” said economist Paul Getman of Regional Financial Associates, a forecasting service in West Chester, Pa. “This economy has real momentum. It’s hot and getting hotter.”

But others said they see signs the rate of growth is slowing, and that interest rate increases soon will begin to have a bigger effect on consumer spending.

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