Expectations of the market prices and individual income for the United States economy is pretty bleak. How does the economy of the U.S. view our market prices and how it affects the aggregate supply and demand is a very interesting topic regarding government spending. The expectation of the government is that consumers will spend according to the income that they will make and have. A study written by Roy Grieve in the Journal of Economics, he stated that “a failure of money wages to move fully with prices implies an alteration of real wages and so the marginal cost in relation to output price (Grieve, 1996). In this article he is implying that if the change in the wages shifts the supply, it will also shift the demand with the increasing in wages comes increase in spending. If the Government spends more toward federal aid for federal jobs, there it will create the demand from the income. This is what will be established later in the paper. When the market prices shift, the aggregate supply and demand will shift accordingly. This is the hope of the government when they are spending money.
Consumer Income
Consumer incomes consist of the amount of take home income remaining after taxes and living expenses that have been deducted from wages, by the government. In February 2013 Consumers earned more and spent more income. This is due to both higher employment rate as well as it being tax time in the U.S. February, helped by a stronger job market that has offset some of the drag from higher taxes. According to "Usa Today: Consumer Spending, Income Jump In February" (2013), "The Commerce Department said that consumer spending rose 0.7% in February from January. This was double the estimated amount by experts, and the most in the five previous months.”
Consumers were capable to spend more because their income had increased 1.1% last month, which followed by January's 3.7% plunge and December's 2.6% surge. These drastic highs and lows where due to bonus pay outs before the tax increase this last December. The start in income also allowed consumers to put a little more away in February. A 2.6 percent increase in the saving rate after-tax income.
Even after taxes and social security rising consumers still spent more of that income even though there take home weekly pay checks where lessoned . Although income taxes have been raised on the highest earners the tax increases both took effect on Jan. 1. The jump in spending and income suggests economic growth strengthened at the start of the year after nearly stalling at the end of last year. These numbers however can be misleading due to the time of the year which is time of tax returns and consumers not saving funds for the rest of the year but spending it and putting it back into the economy as soon as they receive it. From the end of January through the end of February
In the fourth quarter, the growth turns on the low side, due with the 16-day shutdown of the government in October it was
