Definition: This report covers both personal income and consumption expenditures. Personal income includes all sources of earnings--wages (which represents about 58% of the total), interest and dividends, proprietor's income, and other miscellaneous labor income. Consumption is important, because it represents over one-half of the gross domestic product (GDP).
Source: Bureau of Economic Analysis of the U.S. Department of Commerce
Availability: Three to four weeks following the reported month
Likely Impact on Financial Markets:
Interest Rates: Larger-than-expected monthly increase or increasing
considered inflationary, causing bond prices to drop and yields and interest rates
Ability to affect markets:
Analysis of the Indicator:
Personal income and savings data, which is also covered by the report,
provide economists insight
into future spending (consumption) trends. For example, a dip in the savings rate might suggest
consumers are using that means to finance purchases, a spending situation that typically is not
sustainable. The expectation would be for spending to decline in future months.
The bond market prefers a sluggish report. Strong gains in personal
income and consumption suggest
rapid economic growth, causing investors concern the Federal Reserve will be forced to tighten
monetary policy by increasing interest rates.
A Graph of the latest Personal Income data from The Economic Statistics Briefing Room of the White House.
Personal Income report from BEA.