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CNN BREAKING NEWS

Personal Income, Personal Spending Numbers Rise

Aired July 31, 2001 - 08:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
COLLEEN MCEDWARDS, CNN ANCHOR: We do have a couple of financial numbers to report to you that have just come out. I've got them for you right now.

Personal income and personal spending are out just a few moments ago. Personal income is up three-tenths of a percent; personal spending up four-tenths of a percent.

Chris Huntington joins us now to tell us why all of this is important.

How does this measure up, first of all, Chris, with analyst expectations this morning?

CHRIS HUNTINGTON, CNN CORRESPONDENT: Well, both those numbers are one-tenth of a percent higher than what analysts were expecting. But they continue a trend that has been going on for a long time in the United States. And that is that Americans are spending more than they make.

And how are we doing it? On credit cards. Credit card debt is exploding in this country. And it's one of big things hanging over the otherwise very solid consumer spending in this country.

MCEDWARDS: Well, and important for analysts to watch, too, because the theory is that it is that consumer spending that has been warding off a recession.

HUNTINGTON: Pretty much so.

Consumer spending and the housing market have been doing more than their share to prop up the economy. And there is a lot of concern about the possible erosion of that spending. And, indeed, if credit card debt continues mounting the way it is, a lot of folks are concerned that that will simply be the shoe that drops.

MCEDWARDS: And as these numbers sort of inch up as they have been, can you make any conclusions about the financial health of people in the United States?

HUNTINGTON: Well, one thing that is happening is that both -- while incomes and spending are growing -- and, indeed, spending is growing a little bit faster -- they're not growing as rapidly as they did, say, last year. So, overall, the indication is clear that people are slowing down. The economy is slowing down.

The worrisome sign, however, is that people are continuing to spend a little bit more than they earn.

MCEDWARDS: And, Chris, consumer confidence coming out later this morning?

HUNTINGTON: We get it at about 10:00 this morning Eastern time. That's expected to be about flat with where it's been for the last couple of months, essentially at depressed levels from where we were six months ago, but well above the levels of the last recession.

MCEDWARDS: All right, Chris Huntington, thanks very much. Appreciate it.

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