Economy Watch: Consumer Income, Spending Rise in February
Personal income and expenditures were up in February; pending homes sales were up slightly as well; and a gender discrimination suit against Wal-Mart reaches the Supreme Court.
By Dees Stribling, Contributing Editor
First, the good news: According to the Bureau of Economic Analysis, U.S. personal income was up 0.3 percent in February, and personal expenditures rose 0.7 percent. Both of the personal income increases for January and December were revised upward.
Next, the less-than-good news: Most of the increase in income was because of the cut in the payroll tax enacted late last year. Also, the rise in personal expenditures was mostly fueled by the fact that people had to pay more for gas and food in February than they did in January.
Not enough of recent increases in spending were for high-ticket fruit baskets, apparently, as retailer Harry & David filed for Chapter 11 bankruptcy on Monday. The company, which is majority owned by Wasserstein & Co., will try to dump unwanted retail locations and raise new equity as it works its way through bankruptcy, which it says was brought upon it by competition from other retailers and a generally lousy economy.
Pending homes sales see February uptick too
The National Association of Realtors reported on Monday that its Pending Home Sales Index rose 2.1 percent to 90.8 in February, based on contracts signed that month. The index stood at 88.9 in January, so the month-over-month was good, but year-over-year is a different story, since the index was at 98.9 in February 2010.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year NAR published the index, as well as the first of five consecutive record years for existing-home sales. So according to NAR, that level is historically healthy.
Lawrence Yun, NAR chief economist and always one to accentuate the positive, notes in a statement that “pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the homebuyer tax credit.”
Supreme Court to hear Wal-Mart arguments
Opening arguments will be heard on Tuesday before the U.S. Supreme Court in a massive sex discrimination suit against the world’s largest retailer. At issue at the moment is whether a class-action suit on behalf of more than 1 million former female Wal-Mart employees should advance. The enormously big Wal-Mart says no, arguing that the case is too big.
The stakes are big, too. If Wal-Mart loses the case as a class action, it could cost the retailer billions in back pay and billions more in damages. The allegations of the class action, which the Supreme Court is not deciding at this juncture, are that the company made discriminatory decisions about promotions and pay based on gender. A federal trial judge allowed the suit to go forward in 2004, and last year the Ninth Circuit U.S. Court of Appeals upheld that ruling.
Wall Street was up most of the day on Monday, but took a dive in the last minutes of the trading day, with the Dow Jones Industrial Average ending down a slight 22.71 points, or 0.19 percent. The S&P 500 dropped 0.27 percent, and the Nasdaq declined 0.45 percent.