Personal Income Rises, But Consumers Are in the Mood to Save

[Stocks-to-Watch]

Personal income rose in January, but consumers decided to save a larger potion of their paychecks, according to data released by the Commerce Department on Monday. Personal income rose 1% in January, and disposable personal income rose 0.7%. Much of the increase can be attributed to changes in tax policy. The tax bill signed late last year reduced employees’ contributions to social security. That gain was partially offset by the expiration of* tax credits from the 2009 stimulus act. Without the tax changes, disposable personal income would have risen just 0.1%, down from 0.4% in December.

Private wages and salaries rose $14.8 billion in January, down from $20.8 billion in December. People were not, however, spending much more of their new bounty. Consumer spending rose 0.2% in January, down from 0.5% in December. The savings rate also rose, from 5.4% to 5.8%, after dipping slightly in December.

Nonetheless, the market was poised to open higher.



Original Article Source by Barrons.com