http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2309202,00.html The associated press story...here's some highlights:
America's consumers - flush with
tax cuts that left them with extra cash in their wallets - ratcheted up their spending by a strong 0.8 percent in August, helping to power an economic resurgence.
The advance in spending reported by the Commerce Department on Monday came on top of an even bigger 0.9 percent increase in July as larger paychecks and other incentives from President Bush's third
tax cut began to take hold.
The August spending figure was in line with economists' expectations.
"It was almost like
Christmas in August," said Richard Yamarone, economist with Argus Research Corp. "Consumers are really supporting the expansion with a voracious appetite for spending." On Wall Street, stocks moved higher. The Dow Jones industrials gained 67 points and the Nasdaq 32 on Monday.
Meanwhile, Americans' disposable incomes, or what's left after taxes, increased 0.9 percent in August, following a 1.5 percent jump in July.
The government attributed much of the increase in disposable incomes in July and August to the
president's tax cut, which lowered federal tax withholdings, boosting people's take-home pay.
Excluding the tax impact, disposable incomes increased by a more modest 0.3 percent in July and 0.2 percent in August.
The spending and income figures are not adjusted for price changes.
Consumer spending accounts for roughly two-thirds of all economic activity in the United States. Because of that, the behavior of shoppers is a major factor in shaping the economy's recovery.
Consumers are keeping their pocketbooks and wallets sufficiently open to keep the nation's cash registers humming and the economic rebound chugging forward.
The economy grew at a 3.3 percent rate in the second quarter of this year, and economists are predicting that it is now gaining even more momentum.
Many analysts think the economy is growing at a rate in excess of 5 percent in the current quarter and should be able to maintain growth above 4 percent in the final three months of the year.
That forecast, if correct, would represent the strongest back-to- back growth rates since the last two quarters of 1999.Still, analysts caution that they have predicted second-half economic rebounds for three years that have failed to happen as consumers and companies grew cautious - concerned about their own financial situations as well as the economy's future.
Near rock-bottom short-term rates along with the latest round of tax cuts are helping to support consumer spending and offsetting the negative impact of a sluggish job market, economists say.
In August, businesses slashed jobs for the seventh month in a row. And, more recently, claims for unemployment benefits have remained stubbornly high.
The savings rate in August was the best showing since February.
WOW these tax cuts are sure hurting our economy if the AP is saying things are looking better. The author must not have got the memo that "tax cuts hurt the economy".
