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October 30, 2012

Economy Watch: Income, Spending Rise in September; Americans Feeling Better Financially; Sandy Overpowers Wall St.

By Dees Stribling, Contributing Editor

Despite the inclement weather along the eastern seaboard, the Bureau of Economic Analysis published new statistics on personal income and spending on Monday, and they were better than expected. Personal income increased $48.1 billion, or 0.4 percent, in September, according to the bureau. Personal consumption expenditures (PCE) increased $87.9 billion, or 0.8 percent.

Real PCE–that is, adjusted to remove price changes–increased 0.4 percent in September, compared with an increase of 0.1 percent in August. The price index for PCE increased 0.4 percent in September, the same as in August, while the PCE price index without food and energy increased 0.1 percent in September, also the same increase as in August.

Personal saving was $395 billion in September, compared with $445.1 billion in August, according to the BEA. The personal saving rate–personal saving as a percentage of disposable personal income–was 3.3 percent in September, compared with 3.7 percent in August.

Americans Feeling Better About Their Finances

Election polls aren’t the only ones being conducted these days, even though it seems that way. According to Gallup on Monday, 38 percent of Americans now feel better off financially than they were a year ago, compared to 34 percent who feel worse (26 percent said the same). That’s the first time “feeling better” has exceeded “feeling worse” since late 2008. The new data are based on polling conducted as part of Gallup Daily tracking Oct. 22-23.

Gallup did manage to tie the poll numbers to the election, at least indirectly, by reporting that Americans aren’t as positive today about their personal finances as they were in 1996 before President Clinton won a second term. The 49 percent who felt financially better off in March of that year is the highest Gallup has seen in a year in which an incumbent president runs for re-election.

Still, while fairly low on an absolute basis, the 38 percent of Americans feeling better off now is on par with what Gallup found before the 2004 and 1984 elections, when Presidents Bush and Reagan won their re-election bids. Those figures were 41 percent in November 2003 and 39 percent in September 1984, respectively.

Sandy Overpowers Wall Street

It’s too soon to know scale of the economic impact of Hurricane Sandy, but one thing is certain: It shut trading down on Wall Street on Monday, and will do so again on Tuesday. After initially deciding to allow electronic trading on Monday, the New York Stock Exchange reversed itself and shut everything down, out of concern for the workers that would have to be on trading floor even for electronic-only trading.
It’s been a long time since trading stopped for two whole days. In fact, no one can remember the last time, since the last time was on the occasion of the Great Blizzard of 1888, an enormous late winter storm that dropped an estimated 40 to 50 inches of snow on parts of New Jersey, New York, Connecticut and Massachusetts.

One other indirect impact of the storm might be that the government delays reporting employment numbers, which are scheduled to come out, as they usually are, on this Friday. As of Monday evening, however, the Bureau of Labor Statistics hasn’t made a determination about whether the numbers, which are always done in Washington, will be on time.