3/31/2005

Economic Growth

In the article "Americans' incomes, spending rise solidly" it talks about how the average income has risen 0.3% in the month of February, while spend went up 0.5% in the same month. It is said that these increase are because of 262,000 jobs that were created in February. This is all really good news for our economy, but on the other hand I have read other blogs and articles that say we are heading into a recession. I don't understand how we can have a growing economy and be heading into a recession. Can someone explain this to me?

3 comments:

Marie said...

I think that spending went up 2% more than income because the rise in prices. The article didn't state cash purchases only, which means a lot of the purchase could have been made up on credit sales. I think that a lot of people are trying to enjoy the incomes that they are use to, while not realizing that they can't purchase as much per dollar that they were able to. People are using other sources to finace their spending.

Jane said...

Wherever you look, you will find conflicting information on whether or not we're heading into a recession when the truth is, we won't know until we've been there awhile. Economic analysts on both sides of the political fence use economic indicators to predict where we're heading. These indicators often contradict one another, so there may be legitimate arguments for both sides.

Dr. Tufte said...

-1 on Marie's comment for a spelling mistake.

See Salty's prior post - I think he brought up the same article.

Don't believe anyone who says we are going into recession. We may very well be, but that is almost unpredictable. It is true that the economy is doing well, and it is true that we can always go into a recession at any time. Other than that, there isn't much you can say. Jane pretty much hit this nail on the head!