Friday, April 29, 2005

More signs of stagflation

After a discouraging report on economic growth and inflation, today the Commerce Department reported that incomes rose last month:

Americans' incomes rose by 0.5 percent in March, the best showing in three months, and they used the extra money to boost consumer spending by 0.6 percent, the government reported Friday.

But before you go out and spend that paycheck, look again:
While incomes were up 0.5 percent...that increase was wiped out when inflation was taken into account to show no gain in inflation-adjusted disposable incomes in March following a small 0.1 percent increase in February.

But the Commerce Dept. report is a good sign for "the man":
The 0.7 percent increase in the Employment Cost Index represented the smallest rise for wages and benefits in six years.

Watch for another downturn in the "W"-shaped roller coaster economy:
Economists don't believe the surge in energy prices this year will be enough to push the country into a recession but they expect the country to have to endure a repeat of what Federal Reserve Chairman Alan Greenspan termed last year a "soft patch."

A sidebar story on yesterday's Commerce Dept. report sharply defined the economic situation:
The economy braked sharply in the first three months of the year, the government reported yesterday, expanding at its slowest pace in two years as rising energy prices spurred a burst of increased inflation and dragged down spending by businesses and consumers.


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