Future of U.S. Economy Unclear
By: NBC News
Updated: March 1, 2013
New numbers on the economy show Americans are spending more while making less, but some economists say there are two logical reasons for this and nobody should hit the panic button.
Personal income decreased by 3.6 percent in January, the largest drop in 20 years.
It wasn't unexpected, especially after the payroll tax cut disappeared and a big increase in income in December.
There was more consumer spending in January, although mostly because of higher home heating and gasoline prices.
The nationwide average for a gallon of gas has jumped 50 cents since January first.
Still, many economists remain optimistic about the recovery.
"The weight of the evidence right now seems to be that we are creating more jobs, the wages are going up for many many workers, hours have improved," notes Wells Fargo chief economist John Silvia.
Record highs on the stock market show there's some optimism on Wall Street as well.
"There is so much thought that this is just a sugar high, a liguidity drip from the Fed. I think this is very much a fundamentally driven advance in stock market. In the last year in particular. So much more of this economy is now working that wasn't working," says James Paulsen of Wells Capital Management.
U.S. automakers are liking the new year has so far.
Sales of Ford, Chrysler and GM vehicle were all up in February.
Many of the sales were to other businesses.
"Small businesses that are buying anywhere from one to five trucks, full size pickups, vans that was up about 40 percent," explains General Motors Vice President of U.S. Sales Kurt McNeill.
Construction spending fell in January, but a big jump new in new home sales might just cushion the fall.
Possibly the most influential indicator of the American economy gets released next Friday: February's unemployment rate.
