Personal Income and Consumption Expenditures

Importance: ***

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).

Related Indicators:

Source: Bureau of Economic Analysis of  the U.S. Department of Commerce

Frequency: Monthly

Availability: Three to four weeks following the reported  month



Volatility: Moderate

Likely Impact on Financial Markets: 

                    Interest Rates: Larger-than-expected monthly increase or increasing trend is
                    considered inflationary, causing bond prices to drop and yields and interest rates
                    to rise.

                    Stock Markets:

                    Exchange 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.

WEB Links

A Graph of the latest Personal Income data from The Economic Statistics Briefing Room of the White House.

The latest Personal Income report from BEA.