Econoday Report: Personal Income and Outlays 27, 2005

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2005 U.S. Economic Events & Analysis

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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 5/27/05 For Apr 2005

Personal Income, M/M change
Actual	0.7%
Consensus	0.7%
Consensus Range	0.6% to 1.2%

Consumer Spending, M/M change
Actual	0.2%
Consensus	0.8%
Consensus Range	0.5% to 1.0%

Highlights
Personal income jumped a strong 0.7% as expected in April following two months of 0.5% gains. Gains were centered in wages and salaries, which rose a healthy 0.7%. In contrast, proprietor income and interest & dividend income slowed, while rental income once again dipped.

The savings rate edged yet lower to 0.4%, down a tenth and compared with 0.9% in February. The current level is the lowest in 3-1/2 years.

Personal spending also rose sharply, up 0.6% and compared with strong increases of 0.9% and 0.7% in preceding months. Importantly, however, inflation-adjusted spending increased much less, up 0.2% in the month.

The price deflator for personal consumption expenditures (PCE) jumped 0.4% and is up 2.7% on the year. But the core PCE deflator edged only 0.1% higher with a tame year-on-year rate of 1.6%. The core readings will help quiet inflation concerns at the Federal Reserve.

The markets showed no reaction to the data, which show that second-quarter consumption got off to a solid start.

Market Consensus Before Announcement
Personal income increased 0.5 percent in March. April gains could be healthy since nonfarm payrolls jumped, hourly earnings grew, and the average workweek increased as well. Personal consumption expenditures grew 0.6 percent in March. Retail sales jumped in April - and this points to faster growth in personal consumption expenditures as well.

Personal income Consensus Forecast for Apr 05: 0.7 percent
Range: 0.6 to 1.2 percent

Personal consumption expenditures Consensus Forecast for Apr 05: 0.8 percent
Range: 0.5 to 1.0 percent

Trends

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.

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:

8/2

9/1

9/30