Is the Recovery Finally Reaching Main Street?
Data released by the U.S. Bureau of Economic Analysis on Friday morning show that consumers weathered economic headwinds fairly well in August. The BEA’s Personal Income and Outlays report showed that fueled by increased income and spending, the consumer sector could actually be a positive contributor to third-quarter gross domestic product, adding some much-needed momentum to the beleaguered recovery.
Personal income — the total compensation that someone receives — increased 0.4 percent on the month, consistent with economist expectations. Increases in personal income are pretty much prerequisite to increases in consumer spending, which drives as much as two-thirds of total economic activity in the U.S. Disposable personal income — which measures how much money people have left after paying income taxes — increased 0.5 percent. Real disposable personal income — which factors in inflation — increased 0.3 percent.
The increase in personal income in August was the largest gain since February and suggests that Main Street may finally be feeling some love after a long and generally anemic economic recovery process.