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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 1/31/05 For Dec 2004
Personal Income, M/M change
 Actual 3.7%  
 Consensus 3.5%  
 Consensus Range 2.8%  to  4.5%  
    
Consumer Spending, M/M change
  Actual 0.8%  
 Consensus 0.9%  
 Consensus Range 0.4%  to  1.2%  

Highlights
Personal income jumped a roughly expected 3.7 percent in December due to a big dividend payout by Microsoft. Excluding the dividend, income was still up a solid 0.6 percent, right between the 0.4 percent rise in November and 0.8 percent gain in October.

Personal dividend income rose $301.7 billion in the month, dwarfing a $3.4 billion rise in November.

The dividend pushed up the month's annual savings rate to 3.4 percent from 0.3 percent in November. Wages & salaries rose a respectable 0.4 percent.

Personal spending also came in roughly as expected, rising 0.8 percent. Spending on durable goods, reflecting the month's strong auto sales, jumped 4.3 percent after dipping 0.5 percent in November.

Core inflation readings were quite, with the chain-weight price index unchanged (up 1.5 percent on the year). Including food & energy, the index fell 0.1 percent is up 2.4 percent on the year.

Monday's data are old news and won't have a big effect on the financial markets. But Microsoft made for a good December, perhaps a contributing factor behind the healthy holiday shopping season.

Market Consensus Before Announcement
Personal income increased 0.3 percent in November, half as much as in October. December's rise in wages & salaries should be improved due to a larger rise in hours worked for the month. Personal income should get a significant boost from Microsoft's $3/share dividend payment which was paid out in December. It adds up to spurt in income because the numbers are annualized in the Commerce Department estimates. Personal consumption expenditures increased 0.2 percent in November due to a drop in durable goods spending. Motor vehicle sales surged in December and this will help to lift total expenditures.

Personal income Consensus Forecast for Dec 04: 3.5 percent
Range: 2.8 to 4.5 percent

Personal spending Consensus Forecast for Dec 04: 0.9 percent
Range: 0.4 to 1.2 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: 2005 Release Schedule
Released On: 1/31 2/28 3/31 4/29 5/27 6/30 8/2 9/1 9/30 10/31 12/1 12/22
Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov


 
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