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2008 Economic Calendar |
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Resource Center » U.S. & Intl Recaps | Release Dates | Why Investors Care | Today's Calendar
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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
| Released on 3/30/07 For Feb 2007 | |||||||||||||||||||||||||
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Highlights
Today's personal income report looks healthy on the income side but inflation is disconcerting and spending has some questionable detail. Personal income rose a robust 0.6 percent in February, following a 1.0 percent spike in January. February's figure was above the market projection for a 0.3 percent increase in personal income. The wages & salaries component advanced 0.4 percent, following a 1.2 percent surge in January. January's jump was largely due to January increases in government worker salaries and due to private sector bonuses.
Personal income on a year-on-year basis edged up to up 5.3 percent from up 5.2 percent in January. On the same basis, the wages and salaries component fell to up 4.4 percent year-on-year in February from up 5.0 percent in January.
Personal consumption expenditures increased 0.6 percent, following a 0.5 percent gain in January. The consensus had forecast a 0.3 percent rise in consumer spending. Curiously, all on the spending increase was in services. Durables and nondurables were flat in February, but durables followed a very strong January. However, gasoline sales were up in February, yet nondurables spending was flat. The January/February average for consumer spending is healthy but it will take at least another month to see the direction of spending on the margin.
On the inflation front, the overall PCE deflator rose 0.4 percent in February, following a 0.2 percent increase the month before. The core PCE price index (excluding food and energy) firmed further to 0.3 percent, following a 0.2 percent increase in January. The market had forecast a 0.2 percent rise in the core PCE price index. The unrounded percent change for the core PCE price index was 0.40625, compared to 0.19093 in January.
On a year-on-year basis, the overall PCE deflator is up 2.3 percent in February, compared to up 1.9 percent in January. On a year-on-year basis, the core deflator edged back up to up 2.4 percent from up 2.2 percent in January.
The personal saving rate was unchanged in February at minus 1.2 percent.
Today's report shows healthy income but uncertain patterns in spending. Equities will jump on this report, however, as keeping the economy out of recession. The Fed's anti-inflation bias has been confirmed as correct - bonds will not like the report.
Personal income jumped in January due partly to first-of-the-year increases in government salaries, private sector bonuses, and the exercise of stock options. Personal income jumped 1.0 percent in January, following a 0.5 percent boost in December. However, the special factors for January are not likely to be repeated in February. Sluggish employment gains for the month suggest modest gains in wages & salaries, leaving overall personal income soft.
Personal consumption expenditures advanced 0.5 percent in January, following a 0.7 percent increase in December.
With the Fed continuing to focus more on inflation than on soft economic growth, markets will be watching data on the core PCE price index - the Fed's favorite inflation indicator. The core PCE price index firmed in January with a 0.3 percent increase, following a 0.1 percent rise in December. The core CPI provides input for the bulk of the core PCE deflator and the core CPI index came in at 0.2 percent in February - 0.2411 percent unrounded. Markets have finally caught on to the fact that a monthly percent change rounded to one decimal place does not give enough detail on the trend - so pay attention to the monthly percent change to more decimal places. The unrounded percent change for the core PCE price index was 0.25401 percent for January, compared to 0.12672 percent in December.
Personal income Consensus Forecast for February 07: +0.3 percent
Range: -0.2 to +0.5 percent
Personal consumption expenditures Consensus Forecast for February 07: +0.3 percent
Range: +0.2 to +0.4 percent
Core PCE deflator Consensus Forecast for February 07: +0.2 percent
Range: +0.2 to +0.3 percent
![[Chart]](chart.gif)
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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. |
![[Chart]](chart_1.gif)
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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. |
| Personal Income and Outlays: 2007 Release Schedule | ||||||||||||||||||||||||||
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