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 9/28/07 For Aug 2007 | |||||||||||||||||||||||||
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Highlights
Personal income rose an as-expected 0.3 percent in August, held down by a slowing gain in wages and salaries of 0.2 percent. The savings rate showed life, up 0.7 percent and in trend with recent improvement.
Personal outlays increased a greater-than-expected 0.6 percent reflecting a 2.4 percent jump in spending on durable goods, specifically autos.
There was very good news on inflation as the PCE price core index rose only 0.1 percent 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. The overall price index fell 0.1 percent and is also at a 1.8 percent year-on-year pace.
There was no significant reaction to the data though the inflation numbers may give a lift to Treasuries, at least until the approaching release of Chicago purchasers' data and the Reuters/University of Michigan consumer sentiment report.
Personal income growth continued strong in July, posting a 0.5 percent increase, following a 0.4 percent boost in June. But the string of healthy gains is likely to be interrupted in August given the 4,000 decline in payroll jobs for the month and an unchanged workweek. But the 0.3 percent gain in average hourly earnings should keep August's personal income in positive territory - at least the wages & salaries component. Personal consumption strengthened in July, rising 0.4 percent, following a 0.2 percent increase in June. But more recently, retail sales softened with retail sales excluding autos falling 0.4 percent in August. On the plus side, motor vehicle sales were positive for the month. On the inflation front, the core PCE price index rose 0.1 percent in July, down from June's 0.2 percent increase. But the August core CPI number came in at 0.2 percent, albeit the unrounded core CPI was a little below 0.2 percent. There are probably about 50/50 odds on whether the core PCE price index for August comes in at 0.1 percent or 0.2 percent. The markets will be watching this inflation number to see whether the Fed gets the trend down for core inflation in order to make further interest rate cuts.
Personal income Consensus Forecast for August 07: +0.3 percent
Range: +0.2 to +0.4 percent
Personal consumption expenditures Consensus Forecast for August 07: +0.4 percent
Range: +0.2 to +0.6 percent
Core PCE price index Consensus Forecast for August 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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