STACEY VANEK SMITH: Personal income and spending numbers are out this morning and in the first three months of the year we earned a little bit more — half a percent. And spent a little bit more, too.
Here to take a look at that with us is Jill Schlesinger editor-at-large for CBS/Moneywatch. She joins us live, good morning, Jill!
JILL SCHLESINGER: Good morning.
SMITH: So income and spending are up a bit. That sounds like good news.
SCHLESINGER: Yeah, you read that headline tomorrow — spending was up for a ninth straight month. But I think these are really underwhelming numbers because you know consumers spend a lot of their money on gas and food. So that’s not like the greatest way to power an economy. Actually though I don’t think there’s going to be a huge market reaction because a lot of analysts were bracing themselves for worse results, especially on the spending for oil and food.
SMITH: It’s interesting that you mention oil and food because those were both named as a big reason that we saw slow economic growth — GDP — numbers earlier this week.
SCHLESINGER: Yeah, you know the U.S. economy grew at only 1.8 percent in the first quarter — down from 3.1 percent in the fourth quarter of last year. And you know we attributed that weakness to harsh winter weather and a drop in defense spending but again, the increase in oil prices and that really affected consumer spending. Consumers only spent — they only had a gain of 2.7 percent on their spending in the first quarter and that was down from 4 percent in the previous quarter.
SMITH: Here’s the thing though. In spite of all this kind of bad economic news, the markets are doing really really well. They were up again yesterday. What’s going on?
SCHLESINGER: Yeah. This is the head scratching moment. So you know, look — we’re at multi-year highs in the stock market. And yet it seems like the economy’s not really powering forward and I think that we always forget about this. That the stock market’s direction is really a bet on whether companies can make money in the future. Not whether the economy’s doing well, but can these companies make money. And according to corporate earnings results, boy they are making a lot of money, and probably a lot of that comes from these companies that are multi-national. Their profits come from places that are far away, where economic growth is on fire. We just hope that some of that spark gets over here to the U.S. so we get some job creation and the economy starts really firing on all cylinders here in the U.S.
SMITH: Jill Schlesinger with CBS/Moneywatch. Thank you Jill.
SCHLESINGER: Great to be with you.
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