In January 2019, the United States saw a drop in personal income for the first time since November 2015. Following 1 percent of growth in December, consumers have cut back on purchases such as cars and recreational goods. This decline in income and spending further supports some analysts' claims that the economy will continue to slow down in the first quarter of 2019.
Moving forward, I am interested to see what happens with wages for the rest of the year. Even though the decline was less than one percent, when added into the mix with already slow growth and low consumption it looks as if the US economy might finally be slowing down. Also, as the fed looks to slowly continue to raise interest rates, the slow growth or decline in wages could help them as it will further lower consumption.
https://www.cnbc.com/2019/03/01/personal-income-consumer-spending-december-2018.html
3 comments:
This is very interesting, to say the least. I would agree that the decline in income and spending would cause the economy to slow down in 2019. Wages will be tough to predict, depending on many factors. I'm more interested in if more people will be employed since wages are declining. If that happens to be the case, it would make sense a little bit for wages to be dropping.
Perhaps it is a decrease in personal income coupled with a lack of consumer confidence that is causing a decrease in spending. The government shutdown at the beginning of the year will probably have a strong effect on how much people are spending, and if that is the case, then the effects of dropping personal income should be mitigated throughout the rest of the year.
It is interesting that the wage has fallen at this time. Given the Feds impending decisions with their interest rates, you would think that they would wait to lower wages. It is also interesting that wages have lowered given in my article, the consumer confidence rose pretty dramatically. It will definitely be interesting to see what the wage will look like in the upcoming months.
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