Confidence Erodes, Wage Growth Sluggish

[pnutchuck]

By Ros Krasny
CHICAGO (Reuters) - U.S. consumers turned a bit more glum about the future in April as they struggled with record gasoline prices and sluggish wage growth, reports showed on Friday.

Separate reports showed Midwestern manufacturing ticking along at a faster-than-expected rate this month, and consumer spending -- and inflation -- higher in March.

Economists said the day's data did little to change the outlook for interest rates when the Federal Reserve's policy-making Open Market Committee meets on Tuesday.

The personal consumption expenditures, or PCE, index, rose 0.5 percent in March after climbing 0.3 percent in February, further evidence of price pressures in the economy. The data supported expectations the Fed will raise overnight rates by a quarter-percentage point, to 3 percent, with another increase likely in June.

more

http://www.reuters.com/newsArticle.jhtml;jsessionid=NBTRX2XRCV2GMCRBAEZSFFA?type=businessNews&storyID=8348176

[nadinbrzezinski]

1. Surprise, surprise, surprise...

[Gunit_Sangh]

2. But but but

At the NY Times they say this:

Incomes Rose in March at Fastest Pace in 3 Months
By THE ASSOCIATED PRESS

Published: April 29, 2005

Filed at 1:00 p.m. ET

WASHINGTON (AP) -- 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.

The Commerce Department said that the March income gain followed a 0.4 percent rise in February and was the best since a 3.7 percent surge in December, a month when the income figure soared because of a special dividend payment made by computer software giant Microsoft.

{snip}

But later they say this:


When inflation was taken into account, spending in March rose a more modest 0.1 percent following a 0.4 percent increase in February. That sharp difference was explained in part by the fact that energy prices surged during the month, forcing consumers to spend more at the gasoline pump and leaving them with less to spend elsewhere.

While incomes were up 0.5 percent, disposable incomes, the amount left after paying taxes, also showed a 0.5 percent gain in March. However, 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.

Complete story at:
http://www.nytimes.com/aponline/business/AP-Economy.html

[pnutchuck]

3. I'm just posting what's reported.... eom