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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 6/29/07 For May 2007 | |||||||||||||||||||||||||
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Highlights
The personal income report came in with moderate income and spending numbers and a low core PCE price index figure - all good news. The key negative was a surge in the overall price index from the non-core components. Personal income rebounded 0.4 percent in May, following a 0.2 percent dip in April. The May number was below the consensus expectation for a 0.6 percent gain. The key wages and salaries component also rebounded, rising 0.4 percent, following a 0.5 percent drop in April. April's wages and salaries had been weak due to a return to normal levels after a surge in bonus payments earlier in the year.
Personal income on a year-on-year rose to up 6.1 percent from up 5.8 percent in April.
Personal consumption continued strong in May with a 0.5 percent boost - equaling the prior month's gain. The market consensus had projected a 0.7 percent jump in PCEs for May. Spending was led by nondurables with a 1.4 percent surge. Durables advanced 0.4 percent while services slowed to a 0.1 percent increase. Much of the nondurables acceleration, however, was due to higher gasoline prices.
The personal saving rate slipped to minus 1.4 percent in May from minus 1.2 percent the prior month.
On the inflation front, the core PCE price index remained soft, rising 0.1 percent - the same as for April and matching the consensus projection. On a year-on-year basis, the core PCE price index slipped to 1.9 percent from 2.0 percent in April - just within the top end of the Federal Reserve's implicit target. The overall PCE price index continues to portray inflation problems, surging 0.5 percent in May, following a 0.3 percent rise in April. The overall PCE price index rose to 2.3 percent on a year-on-year basis from 2.2 percent in April.
Today's report is well rounded for the markets with moderately healthy income and spending and a low core price index. Bonds and equities should like the report especially if they choose to ignore the food and energy spikes in the overall price index. However, the Fed will take note of the strong food and energy components in prices.
Personal income fell 0.1 percent in April, following a 0.8 percent jump the prior month. But April's weakness was largely technical - reflecting the coming off of atypically strong months earlier. April income was pulled down by a 0.4 percent drop in wages & salaries income. April's wages & salaries component was coming off a first quarter surge in unusually large bonus payments and the exercise of stock options. Wages and salaries growth should resume tracking growth in employment, wages, and hours worked - which were healthy in May. Personal consumption expenditures increased a robust 0.5 percent in April, following a 0.4 percent rise in March. More recently, retail sales jumped 1.4 percent in May with gains broad-based. Excluding autos and gasoline, sales were up 1.0 percent in May. Markets also will be focusing on the core PCE deflator to see if it will track recent improvement in the core CPI. The core PCE price index rose a modest 0.1 percent in April, following no change in March. More recently, the core CPI rose 0.1 percent in May.
Personal income Consensus Forecast for May 07: +0.6 percent
Range: +0.4 to +0.9 percent
Personal consumption expenditures Consensus Forecast for May 07: +0.7 percent
Range: +0.5 to +1.0 percent
Core PCE price index Consensus Forecast for May 07: +0.1 percent
Range: +0.1 to +0.2 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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