2011 Economic Calendar
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Personal Income and Outlays
Released On 11/23/2011 8:30:00 AM For Oct, 2011
PriorPrior RevisedConsensusConsensus RangeActual
Personal Income - M/M change0.1 %0.3 %0.1 % to 0.5 %0.4 %
Consumer Spending - M/M change0.6 %0.3 %0.2 % to 0.5 %0.1 %
Core PCE price index - M/M change0.0 %0.1 %0.0 % to 0.2 %0.1 %
Personal Income - Yr/Yr change4.4 %4.0 %3.9 %
Consumer Spending - Yr/Yr change5.3 %5.2 %4.7 %
Core PCE price index - Yr/Yr change1.6 %1.7 %

Highlights
Personal income and spending posted additional gains in October. Inflation was tame. Personal income in October advanced 0.4 percent, following a 0.1 percent increase in September. The October rise came in higher than the market median projection for 0.3 percent. The wages & salaries component posted an even stronger 0.5 percent boost after rebounding 0.4percent the month before.

The pace of consumer spending eased in October but followed a strong gain the prior month. Personal consumption expenditures rose 0.1 percent in October, following a 0.7 percent surge in September. Market expectations were for a 0.3 percent gain. By components, personal spending was led by durables, up 0.8 percent after a 2.9 percent jump in September . On a drop in gasoline prices, nondurables decreased 0.2 percent, following a 1.0 percent jump the month before. Services rose 0.1 percent after a 0.2 percent gain in September.

Headline inflation turned negative while the core rate was soft. The headline PCE price index declined 0.1percent, following a 0.2 percent increase in September. The market expectation was for no change. The core rate firmed modestly to a 0.1 percent rise in October from no change the month before. Analysts had called for a 0.1 percent rise.

Year-on-year, headline prices are up 2.7 percent, compared to 2.9 percent in September. The core is up 1.7 percent on a year-ago basis versus 1.6 percent the month before.

The October personal income report is moderately strong, taking into account that the easing in spending came off a strong September. Within income, the robust gain in the wage & salaries component is particularly encouraging. While unemployment remains high, for consumers that are employed, the fundamentals for spending continue to improve.

Market Consensus before announcement
Personal income in September edged up 0.1 percent, following a 0.1 percent dip in August. Importantly, the wages & salaries component rebounded 0.3 percent, after declining 0.1 percent in August. Consumer spending in September ramped up, gaining 0.6 percent, following a 0.2 percent rise in August. Spending was led by durables with nondurables and services also gaining.
Turning to inflation numbers, the headline PCE price index increased 0.2 percent after gaining 0.3 percent in August. The core rate slowed to no change from up 0.2 percent in August.

Looking ahead, in personal income, there should be a moderate gain in the private wages & salaries component as aggregate earnings for total private workers gained 0.3 percent. The manufacturing component in industrial production is likely to be robust in October as aggregate production worker hours in manufacturing surged 1.0 percent in October. Personal spending should be healthy as unit new motor vehicle sales increased 1.2 percent while retail sales excluding autos jumped 0.6 percent in October. Headline CPI inflation declined 0.1 percent in October while the core CPI edged up 0.1 percent.

Definition
Personal income is the dollar value of income received from all sources by individuals. Personal outlays include consumer purchases of durable and nondurable goods, and services.  Why Investors Care
 
[Chart]
Changes in taxes or social security cost of living adjustments can cause some sharp variations in monthly disposable income growth. However, on the whole, monthly changes in disposable income fluctuate less than monthly changes in personal consumption expenditures.
Data Source: Haver Analytics
 
[Chart]
Monthly changes in personal consumption expenditures are usually skewed by large changes in spending on durable goods. Spending on nondurable goods and services tend to be less volatile from one month to the next.
Data Source: Haver Analytics
 

 

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