On Thurday, the government, apparently as determined as the press to create good news where there is none, opened its March report on Personal Income and Outlays as follows: "Personal income increased $6.2 billion, or less than 0.1 percent." Yeah, it was so much less than 0.1 percent that it rounded down to 0.0 percent in current dollars in the table which followed. In real terms, i.e., after adjusting for inflation, personal income fell by 0.2 percent.
Naturally, the Associated Press, aka the Administration's Press, joined in on the spin. Excited over the fact that spending rose by 0.4 percent (0.3 percent in real terms) despite the income decline, AP's headline writers went all-in: "SPRING AWAKENING: US CONSUMER SPENDING ROSE IN MARCH." Martin Crutsinger's coverage was also predictably rosy, and of course played the weather card:
U.S. consumers boosted spending in March by the largest amount in four months, a hopeful sign that this key sector of the economy is reviving after a frigid winter.
Consumer spending increased 0.4 percent in March, the strongest gain since a similar increase in November, the Commerce Department reported Thursday. Spending fell in December and January before climbing a modest 0.2 percent in February.
Consumer spending, which accounts for 70 percent of U.S. economic activity, should help bolster an economy that barely grew in the first quarter. The data, combined with other reports Thursday that showed rising wages and a 15-year-low in unemployment aid applications, suggest that while the economy started off slowly, it gained momentum as winter turned to spring.
Today's reports "all point to an economy that is doing a lot better than the near-stagnation in the first quarter GDP suggests," said Paul Ashworth, chief U.S. economist for Capital Economics.
The rise in spending came despite the fact that income growth was flat in March. It was the poorest showing in more than a year and a reflection of the fact that job gains slowed sharply in the month.
The final excerpted paragraph shows that Crutsinger hid the real decline noted above.
It would be impossible to count all the times we have heard and seen the press and this administration caution us after the release of negative economic data that "it's only one month, so don't read too much into this." But let there be a decent month in a key metric, and it's an "awakening." Though several preceding months arguably provided a bit of positive cushion, Americans consistently continuing to spend a half-percent more than they earn (the difference between March's real spending increase of 0.3 percent and the real income decline of 0.2 percent) would not be a good thing.
As was the case in yesterday's post, Crutsinger ignored the second-quarter gross domestic product growth prediction at the Atlanta Federal Reserve. Its GDP Now model predicted that the first quarter would come in at 0.1 percent, while almost everyone else was at 1.0 percent or higher. Wednesday's advance result, pending revisions in May and June and a comprehensive revision coming in July, was 0.2 percent.
At the time Crustinger wrote his Thursday report, the Atlanta Fed was predicting pathetic annualized growth of 0.9 percent for the second quarter. Now it's at 0.8 percent.
That's some "awakening," AP.
Cross-posted at BizzyBlog.com.
