Personal Income And Outlays

Personal Income and Outlays is a group of data points produced by the Bureau of Economic Analysis that track personal income and monthly spending. Personal income is the dollar value of income from all sources by individuals in the U.S.; personal outlays are the dollar value of purchases of durable (consumer goods that are not purchased frequently), and non-durable goods and services by U.S. consumers.

Personal Income and Outlays is an economic indicator helps gauge the strength of the U.S. consumer sector. Because consumer spending equates to such a large portion of the country's Gross Domestic Product (GDP), being able to gauge trends in income and spending is extremely important to investors because it provides an indication about the overall strength of the economy. Also, if investors can track whether consumer monies are being spent on durables, non-durables or services, they can better analyze in which companies to invest.

As income and spending increase, it is thought that the equity markets should react positively. This is because of an assumed resulting increase in corporate profits. However, this upswing could lead to wage and product inflation, which could have a negative effect on bond markets.

In 2018, the Bureau of Economic Analysis report on Personal Income and Outlays indicated that wages and salaries grew for the fifth straight month. Personal income increased by an estimated 0.3% to $47.8 billion for the month, disposable personal income (DPI) rose 0.3 percent to $39.8 billion and personal consumption expenditures (PCE) were up 0.4 percent to $61.7 billion. The wages and salaries component drove the increase in personal income in March. Economists had been hoping for growth in wages because the labor market had been strong in the previous few years. The $50 billion increase in the PCE reflected a $24.2 billion increase in spending for goods and a $26.8 billion uptick in expenditures for services.