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 12/21/07 For Nov 2007 | |||||||||||||||||||||||||
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Highlights
Today's report clearly shows that inflation remains a key concern while chances of recession faded notably today. The November personal income report should bump up interest rates while equities will struggle to figure out the impact of whether lower odds of Fed easing offsets good news on consumer health. Also, today's PCEs data will likely nudge up forecasts for fourth quarter GDP.
The consumer continues to get enough fuel to propel spending. Personal income on a year-on-year basis was steady at up 6.0 percent in November. The wages and salaries component edged up to 5.2 percent year-on-year from 5.1 percent in October.
On the spending side, the consumer was on a spending spree. Personal consumption in November surged 1.1 percent, following a moderate 0.4 percent rise in October. The consensus had expected a 0.8 percent gain in personal spending. However, for the latest month, much of the acceleration in spending was due to higher gasoline prices. By components, durables advanced 0.3 percent in November, while nondurables and services jumped 2.0 percent and 0.8 percent, respectively. Even taking into account that higher gasoline prices were behind much of the spike in nondurables, consumer spending was strong. In constant dollars, overall personal consumption jumped 0.5 percent in November, following a 0.1 percent rise the month before.
Inflation heated up in November. Not surprisingly with recent sharp increases in oil prices, the overall PCE price index jumped 0.6 percent in November, up from a 0.3 percent increase in October. However, the core PCE price index rose 0.2 percent in November, the same as for the prior month and equaling expectations. But the year-on-year trend for headline and core inflation is not looking good. Headline inflation jumped to 3.6 percent in November from 3.0 percent in October. Core inflation rose to 2.2 percent year-on-year in November from 2.0 percent the previous month.
Today's report clearly shows that inflation remains a key concern while chances of recession faded notably today. The November personal income report should bump up interest rates while equities will struggle to figure out the impact over whether the impact on the Fed offsets good news on consumer health. Also, today's PCEs data will likely nudge up forecast for fourth quarter GDP.
Personal income in October softened while core inflation remained a little on the high side. Personal income slowed to a 0.2 percent rise in October, following a 0.3 percent increase the prior month. Within personal income, the wages and salaries component weakened sharply to a 0.1 percent advance, following a 0.6 percent increase in September. On the spending side, the consumer is increasingly cautious. Personal consumption in October rose a modest 0.2, following a 0.3 percent increase in September. On the inflation front, the core PCE price index rose 0.2 percent in October, matching the increase in the prior month. The overall PCE price index increased 0.3 percent, the same as in September.
More recently, moderate employment gains in November and a 0.5 percent spike in average hourly earnings point toward a healthy gain in personal income or at least the wages & salaries component. Retail sales in November surged 1.2 percent and provide strong support for the durables and nondurables portions of personal consumption. The core consumer price index accelerated from 0.2 percent in October to a 0.3 percent increase in November, suggesting that the core PCE price index also likely will firm above a recent string of 0.2 percent increases.
Personal income Consensus Forecast for November 07: +0.5 percent
Range: +0.4 to +0.5 percent
Personal consumption expenditures Consensus Forecast for November 07: +0.8 percent
Range: +0.5 to +1.0 percent
Core PCE price index Consensus Forecast for November 07: +0.2 percent
Range: +0.1 to +0.3 percent
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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. |
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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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