Personal Income

Who: Bureau of Economic Analysis of the Department of Commerce

When: Around the first business day of the month for two months prior

What: Personal Income measures the change in compensation that individuals receive from all sources including: wages and salaries, proprietors' income, income from rents, dividends and interest and transfer payments. The report shows both before and after taxes and also reports personal spending and personal savings. The largest component of personal income is wages and salaries from employment.
Personal spending, also known as PCE (personal consumption expenditures), is comprised of three categories: durables, non-durables, and services. PCE measures the change in market value of all goods and services purchased by individuals and it is the largest component of GDP. Personal consumption expenditures are affected by price inflation, personal income growth, and growth in regional population.

Why: The two reports combined give the savings rate, which is the difference between disposable income (personal income -taxes) and consumption, divided by disposable income. The savings rate is a good signal for consumer spending patterns. Both reports are released behind other more significant reports that give the same information and markets typically react very little to their release. The PCE report is the only report detailing service expenditures and can occasionally surprise the markets. Consumer spending is a major piece of the economy and both reports help to forecast future trends.