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Income, Spending Post Fractional Gains

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From Associated Press

Consumer spending remained sluggish in November, inching up just 0.1% after holding steady in the previous month, the government said today. Personal income rose a scant 0.3%, just keeping even with the inflation rate.

The Commerce Department said spending last month totaled a seasonally adjusted annual rate of $3.73 trillion, up from $3.72 trillion in October. The October total was unchanged from the previous month.

At the same time, incomes totaled a seasonally adjusted annual rate of $4.71 trillion, up from $4.70 trillion the previous month when they rose 0.5%. The increase was due entirely to higher farm subsidies. Excluding these payments, personal income was essentially unchanged.

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Until October, spending had increased every month since last May. Personal consumption accounts for about two-thirds of the nation’s economic activity.

The department reported earlier this week that consumer spending had risen at a 2.7% annual rate from July through September. But the October and November figures illustrate the weakening in the economy, which most economists now believe is in a recession.

Americans’ saving rate--savings as a percentage of disposable income--edged up to 4% from a 3.7% rate in October. The saving rate for all of 1989 was 4.6%.

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The report said Americans’ disposable incomes, or incomes after taxes, inched up 0.3% after remaining flat the previous month.

The spending and income figures were not adjusted for inflation. When adjusted, spending actually fell 0.2% after a 0.8% decline in October, the lowest since a 2.2% decrease in January, 1987.

Disposable incomes, when adjusted for inflation, did not budge from October, when they declined 0.8%, the steepest drop since a 1.1% decline in April, 1989.

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A key component of the income category--wages and salaries--fell $3.9 billion, after a revised $15.3-billion decline the previous month. The October drop originally was reported to have been $9.3 billion.

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