2008 Economic Calendar
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Personal Income and Outlays
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

Released on 11/1/07 For Sep 2007
Personal Income - M/M change
 Actual 0.4%  
 Consensus 0.5%  
 Consensus Range 0.3%  to  0.5%  
 Previous 0.3 %  
   
Consumer Spending - M/M change
  Actual 0.3%  
 Consensus 0.4%  
 Consensus Range 0.2%  to  0.5%  
 Previous 0.6 %  

Highlights
Personal income in September remained strong while consumer spending softened and inflation picked up slightly. Personal income posted a 0.4 percent gain in September, equaling the advance in August. The September gain was just below the consensus forecast for a 0.5 percent boost. Within personal income, the wages and salaries component rose 0.6 percent in September, following a healthy gain of 0.4 percent the month before. Personal income on a year-on-year basis eased to up 6.8 percent from up 6.9 percent in August.

The consumer sector is showing caution after the recent credit crunch. Personal consumption slowed in September, rising 0.3 percent, following a 0.5 percent increase in August. Strength was primarily in nondurables, reflecting higher gasoline prices. The market consensus had projected a 0.4 percent gain in PCEs for September. By components for personal consumption, durables rose 0.2 percent after a 2.5 percent spike in August. Reflecting swings in gasoline prices, nondurables rebounded 0.6 percent in September, following a 0.6 percent drop the month before. Services slowed sharply to a 0.2 percent increase, following a 0.7 percent jump in August.

Disposable personal income rose 0.4 percent in September and outpaced consumption as the personal saving rate edged up to 0.9 percent in September from 0.8 percent in August.

Although the consumer is slowing down a bit, you cannot see it in inflation numbers. On the inflation front, the core PCE price index increased 0.2 percent, firming after August's 0.1 percent rise. The September core PCE price index matched the consensus forecast for a 0.2 percent increase. The overall PCE price index firmed with a 0.2 percent jump, following no change August. The core PCE price index on a year-on-year basis was up 1.8 percent in September, the same as in August, while the overall PCE price index rose to up 2.4 percent in September from up 1.8 percent the month before.

Today's report is mixed and supports the Fed's view that risks on inflation and too weak economic growth are balanced. We are seeing some pullback in the consumer sector but also stubborn inflation.

Market Consensus Before Announcement
Personal income rose a moderate 0.3 percent in August, held down by a slowing gain in wages and salaries of 0.2 percent. We did get stronger increases in September in employment and in wages so we will likely see a little stronger number in income for the month. Although the personal income report is released the day after the October 30-31 FOMC meeting ends, this report is likely to be the key release that starts the debate over the next Fed move after this one. And a key piece of information will be the core PCE price index. This inflation measure rose only in August with the year-on-year rate up only 1.8 percent, the lowest in 3-1/2 years and under the Federal Reserve's 2 percent comfort limit for the third straight month. But the core CPI index firmed to an unrounded 0.2196 percent boost in September, following a 0.1503 gain in August. That is, we will likely see the core PCE price index post a gain that exceeds the Fed's comfort zone.

Personal income Consensus Forecast for September 07: +0.5 percent
Range: +0.3 to +0.5 percent

Personal consumption expenditures Consensus Forecast for September 07: +0.4 percent
Range: +0.2 to +0.5 percent

Core PCE price index Consensus Forecast for September 07: +0.2 percent
Range: +0.2 to +0.2 percent
Trends
[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.

[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
Personal Income and Outlays: 2007 Release Schedule
Released On: 2/1 3/1 3/30 4/30 6/1 6/29 7/31 8/31 9/28 11/1 11/30 12/21
Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov


 
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