Tags: Rising | Incomes | Stronger | Recovery

WSJ: Rising Incomes Not Enough to Fuel Stronger Recovery

Monday, 13 February 2012 08:01 AM

Incomes have been rising lately but likely won't do enough to speed up the tepid pace of economic recovery, a study shows.

Between August and December, real median annual household income in the U.S. rose by 4 percent, according to a study by Sentier Research, The Wall Street Journal reports.

According to the report, based on Census numbers, median household income rose to $51,413 in December from $49,434 in August.

The gains are "fairly impressive," says Sentier Research’s Gordon Green, adding "but it is very difficult to maintain that rate of growth over the long haul," the Journal adds.

Experts point out that 2011 saw a bounce in incomes at the beginning of the year as well, although the growth tapered thanks to the Arab Spring uprisings, the Japanese earthquake, an escalating debt crisis in Europe and political brinkmanship over economic policy in the U.S.

Meanwhile the Bloomberg Consumer Comfort Index rose to minus-44.8 in the period to Jan. 29 from minus -46.4 the previous week.

The measure shows pessimism is on the decline among Americans.

While economists are happy with rising incomes, they fear headwinds could wipe out improving confidence.

"Rising incomes and aggressive discounting by retailers likely created a better buying climate and bolstered consumer confidence to close out January," says Joseph Brusuelas, a senior economist at Bloomberg LP in New York, the newswire reports.

"That being said, the increase in the cost of gasoline and the most tenuous of gains in the labor market does place the improvement in confidence in jeopardy."

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Monday, 13 February 2012 08:01 AM
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