Income, Spending Up Again

Over the weekend, every newspaper in the country headlined “Poverty rate up, median income down “ or something similar. The story, of course, was about the 2002 Census Bureau data on incomes and poverty. Democrats hailed the bad news as welcome evidence that the administration’s economic policies have failed.
But the 2002 data are now nearly a year out of date, and the news this year, especially since the income tax cut took effect during the summer, is much better. Current spending and income data for August have just been released, and once again they show healthy increases. This chart, showing personal spending over the last twelve months, could spell trouble for the Democrats. It helps explain why people responding to surveys are currently more optimistic about their own prospects than about the economy generally, which is the subject of overwhelmingly negative press coverage.

If personal spending keeps growing at anything like the current rate over the next thirteen months, it will be hard for the Democrats to convince voters that the economy is so bad as to demand a change in administrations.