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 10/31/08 For Sep 2008 | |||||||||||||||||||||||||
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Highlights
The September personal income report shows the consumer sector softening - notably with a pullback in spending. Personal income in September edged up 0.2 percent, following a 0.4 percent rebound in August. The September rise was just above the consensus forecast for a 0.1 percent increase. Within personal income, the wages and salaries component nudged up a slim 0.1 percent in September, after posting a 0.4 percent boost the previous month.
Spending weakened even further in September. Personal consumption expenditures dropped 0.3 percent, following no change in August. The consensus had forecast a decline of 0.3 percent for personal spending. Most of the weakness in the latest month was in durables with a monthly 2.9 percent fall. Nondurables also declined, by 0.8 percent, while services rose 0.2 percent.
On the inflation front, the headline PCE price inflation remained modest. The overall index rose an incremental 0.1 percent, following a flat reading in August. The core PCE price index inflation rate was unchanged with a 0.2 percent. The market had forecast a core increase of a mere 0.1 percent for the latest month.
Year on year, personal income growth slipped to up 3.9 percent from up 4.3 percent in August. Headline PCE inflation slowed to up 4.2 percent from up 4.5 percent the month before. Core PCE inflation softened to 2.4 percent from 2.5 percent in August. Both headline and core PCE price inflation remain above the Fed's implicit inflation target range of 1-1/2 to 2 percent annualized. But with the trend in oil prices and in consumer spending, the Fed likely will get its forecast for target inflation in coming months.
The September personal income report shows the consumer sector retrenching - and this was before October's negative numbers in the stock market and drop in consumer confidence. The numbers were close to expectations and the markets are more likely to focus on end of the month issues for closing accounts for October. Nonetheless, the numbers are worrisome for where the consumer is headed in coming months. Today's pending report on consumer sentiment is the next indicator on the pulse of the consumer sector.
Personal income for August personal income report was good on the income side but worrisome on the spending side. Personal income in August rebounded 0.5 percent, following a 0.6 percent drop in July. Within personal income, the wages and salaries component posted a 0.4 percent increase in August, after advancing 0.3 percent the previous month. Consumers have been tight with their money as personal consumption expenditures in August were flat, following a mere 0.1 percent uptick in July. On the inflation front, the headline PCE price finally eased on lower energy costs. The overall index slowed to no change, following hefty gains in July and June of 0.6 percent and 0.8 percent, respectively. The core PCE price index slowed to 0.2 percent from 0.3 percent in July. Looking ahead, continued declines in employment point to anemic income numbers for September. Retail sales for September were abysmally negative and PCEs outside of services will likely follow that act. But we should get good PCE price index numbers as headline CPI inflation was flat in September and the CPI core edged up only 0.1 percent.
Personal income Consensus Forecast for September 08: +0.1 percent
Range: -0.5 to +0.4 percent
Personal consumption expenditures Consensus Forecast for September 08: -0.3 percent
Range: -0.8 to +0.3 percent
Core PCE price index Consensus Forecast for September 08, m/m: +0.1 percent
Range: 0.0 to +0.2 percent
Core PCE price index Consensus Forecast for September 08, y/y: +2.5 percent
Range: +2.4 to +2.5 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: 2008 Release Schedule | ||||||||||||||||||||||||||
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