WASHINGTON (AP) -- Americans' personal income rose again in March but their spending kept pace, leaving the savings rate at a record low.
Personal income increased a seasonally adjusted 0.4 percent in March following a 0.5 percent gain in February and a 0.6 percent rise in January, the Commerce Department said Monday.Consumers matched their income growth with a 0.4 percent spending speedup in March, more moderate than February's 0.8 percent rise but nevertheless adding an eighth month to a streak of increases.
Overall spending has outpaced income growth, leaving the nation's personal savings rate -- savings as a percentage of after-tax income -- in negative territory for five of the last six months. In March, the savings rate held steady at a record low of minus 0.6 percent.
The consumer spending spree helped keep the U.S. economy growing at a robust 4.5 percent annual rate during the first three months of this year, despite analysts' expectations that overseas economic turmoil would take more of a toll.
Low interest and mortgage rates have also fueled spending on construction projects, which rose 0.5 percent in March, despite a drop in commercial building, the Commerce Department said in a separate report Monday. That came on top of four previous months of increases, including a big 2 percent jump in February.
Construction spending for the first three months of 1999 was 10 percent higher than in the same period last year.
Meanwhile, corporate purchasing executives said in a separate report released Monday that the nation's manufacturing sector continued to expand for the third straight month in April. But the growth was less robust than in the previous month, according to the survey by the National Association of Purchasing Management.
Some analysts speculate an economic slowdown is coming.
However, economist Sung Won Sohn, with Wells Fargo & Co. in Minneapolis, said, "I don't think this is it.
"The fact that consumers are willing to bring the savings rate into the negative territory indicates that they're not concerned about their income and jobs," Sohn said.
Investors pushed up the Dow Jones average of industrial stocks by more than 100 points this morning, erasing an 89-point loss Friday. Thursday's 10,878 close was a record.
With the nation's unemployment rate near a 29-year low, demand for labor is strong and wages are rising -- by 0.3 percent in March.
Continuing solid stock market gains are also lining many people's pockets. Interest and dividend income rose in March, along with rental incomes and business owners' incomes.
Farmers' incomes, however, declined. The farm sector has been among the hardest hit by a record U.S. trade deficit resulting from economic hard times abroad.
Consumer spending on services jumped by 0.7 percent in March, offsetting a 0.7 percent drop in purchases of durable goods, big-ticket items expected to last three or more years. Spending on nondurable goods, such as food and fuel, increased 0.4 percent.
Spending on building new homes, which consumers have been snapping up at record rates, rose 2 percent in March after a smaller increase in February. Spending was up on construction of both single-family homes and apartment buildings.
In a third report, the department said that in 1998 spending on work on existing residential properties rose 0.8 percent, with two-thirds of a total $119.5 billion spent on home improvements, rather than maintenance and repairs.
Spending on commercial construction fell 2.1 percent, a large drop, but not enough to wipe out the huge 4.0 percent increase the month before. Spending on office building projects was up slightly, but was more than offset by declines in industrial, hotel and retail construction.
Government construction spending rose 0.3 percent, with highways, sewer systems and water supply facilities leading the way.