Personal Income and Outlays – October 2008

Personal Income and Spending At a Glance

• Personal Income: $12,214.7 billion
• Monthly Change: Up 0.3%
• Real Disposable Personal Income: Up 1%
• Personal Spending (Outlays): $10,435.2 billion (annual)
• Monthly Change: Down $105.1 billion

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PERSONAL INCOME AND OUTLAYS
October 2008
Personal income increased $42.4 billion, or 0.3 percent, and disposable personal income (DPI)
increased $45.1 billion, or 0.4 percent, in October, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) decreased $102.8 billion, or 1.0 percent. In September,
personal income increased $8.0 billion, or 0.1 percent, DPI increased $11.6 billion, or 0.1 percent, and
PCE decreased $33.7 billion, or 0.3 percent, based on revised estimates.

Real DPI increased 1.0 percent in October, compared with an increase of less than 0.1 percent in
September. Real PCE decreased 0.5 percent, compared with a decrease of 0.4 percent.

2008
June July Aug. Sept. Oct.
(Percent change from preceding month)
Personal income, current dollars 0.1 -0.8 0.3 0.1 0.3
Disposable personal income:
Current dollars -1.8 -1.0 -1.1 0.1 0.4
Chained (2000) dollars -2.6 -1.6 -1.1 0.0 1.0
Personal consumption expenditures:
Current dollars 0.5 -0.1 -0.1 -0.3 -1.0
Chained (2000) dollars -0.2 -0.6 -0.1 -0.4 -0.5

The October and September changes in personal income were effected by Hurricane Ike,
which struck the Gulf Coast region, especially impacting coastal Texas and Louisiana, on
September 13, 2008. In September, rental income of persons was reduced by about $27 billion
(at an annual rate), proprietors’ income was reduced by about $9 billion (at an annual rate) to
reflect uninsured losses of residential and business property, and “other current transfer receipts
from business (net)” was boosted by about $27 billion (at an annual rate) to reflect insurance
benefits paid to persons. The net effect of these adjustments was to lower September personal
income $8.5 billion. Because other effects of the hurricane were embedded in BEA’s source
data and could not be separately identified, BEA did not attempt to quantify their impact.

Wages and salaries

Private wage and salary disbursements increased $3.9 billion in October, in contrast to a
decrease of $6.6 billion in September. Goods-producing industries’ payrolls decreased $1.7 billion,
compared with a decrease of $3.9 billion; manufacturing payrolls decreased $0.6 billion, compared
with a decrease of $3.0 billion. Services-producing industries’ payrolls increased $5.6 billion, in
contrast to a decrease of $2.6 billion. Government wage and salary disbursements increased $4.5
billion, compared with an increase of $2.6 billion.

Other personal income

Supplements to wages and salaries increased $2.5 billion in October, compared with an
increase of $0.5 billion in September.

Proprietors’ income increased $1.7 billion in October, in contrast to a decrease of $6.9 billion in
September. Farm proprietors’ income decreased $6.9 billion, compared with a decrease of $2.6
billion. Nonfarm proprietors’ income increased $8.7 billion, in contrast to a decrease of $4.3 billion.
Changes in nonfarm proprietors’ income reflected the impact of Hurricane Ike, which subtracted
$8.8 billion (at an annual rate) in September.

Rental income of persons increased $30.6 billion in October, in contrast to a decrease of $24.6
billion in September. Changes in rental income reflected the impact of the hurricane, which
subtracted $26.6 billion (at an annual rate) in September.

Personal income receipts on assets (personal interest income plus personal dividend income)
increased $7.4 billion in October, compared with an increase of $2.2 billion in September.

Personal current transfer receipts decreased $7.7 billion in October, in contrast to an increase of
$39.6 billion in September. Changes in personal current transfer receipts primarily reflected the
impact of net insurance settlements associated with the hurricane, which added $26.9 billion (at an
annual rate) in September.

Contributions for government social insurance — a subtraction in calculating personal income –
increased $0.3 billion in October, in contrast to a decrease of $1.1 billion in September.

Personal current taxes and disposable personal income

Personal current taxes decreased $2.6 billion in October, compared with a decrease of $3.6
billion in September. Disposable personal income (DPI) — personal income less personal current
taxes — increased $45.1 billion, or 0.4 percent, in October, compared with an increase of $11.6
billion, or 0.1 percent, in September.

Personal outlays and personal saving

Personal outlays — PCE, personal interest payments, and personal current transfer payments
decreased $105.1 billion in October, compared with a decrease of $34.2 billion in September. PCE
decreased $102.8 billion, compared with a decrease of $33.7 billion.

Personal saving — DPI less personal outlays — was $260.9 billion in October, compared with
$110.8 billion in September. Personal saving as a percentage of disposable personal income was 2.4
percent in October, compared with 1.0 percent in September. Saving from current income may be
near zero or negative when outlays are financed by borrowing (including borrowing financed
through credit cards or home equity loans), by selling investments or other assets, or by using
savings from previous periods. For more information, see the FAQs on “Personal Saving” on
BEA’s Web site. For a comparison of personal saving in BEA’s national income and product
accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and data on
changes in net worth (which help finance consumption), go to http://www.bea.gov/bea/dn/nipaweb/Nipa-Frb.asp.

Real DPI and real PCE

Real DPI — DPI adjusted to remove price changes — increased 1.0 percent in October,
compared with an increase of less than 0.1 percent in September.

Real PCE — PCE adjusted to remove price changes — decreased 0.5 percent in October,
compared with a decrease of 0.4 percent in September. Purchases of durable goods decreased 3.8
percent, compared with a decrease of 3.6 percent. Purchases of motor vehicles and parts accounted
for most of the decreases in durable goods in October and September. Purchases of nondurable
goods decreased 0.6 percent in October, the same decrease as in September. Purchases of services
increased 0.2 percent in October, the same increase as in September.

PCE price index — The price index for PCE decreased 0.6 percent in October, in contrast to an
increase of 0.1 percent in September. Prices, excluding food and energy, decreased less than 0.1
percent, in contrast to an increase of 0.2 percent.

Revisions

For April through June, the revisions to wages and salaries reflected the incorporation of newly
available BLS tabulations of second-quarter private wages and salaries from the quarterly census of
employment and wages. Wages and salaries were revised down for all three months. Revisions to
personal current taxes and to contributions for government social insurance reflected the revisions to
wages and salaries. Changes in personal income, current-dollar and chained (2000) dollar DPI, and
current-dollar and chained (2000) dollar PCE for August and September — revised and as published
in last month’s release — are shown below.

Change from preceding month
August September
Previous Revised Previous Revised Previous Revised Previous Revised
(Billions of dollars) (Percent) (Billions of dollars) (Percent)
Personal Income:
Current dollars…………………. 44.8 30.5 0.4 0.3 24.5 8.0 0.2 0.1
Disposable personal income:
Current dollars…………………. -107.7 -119.7 -1.0 -1.1 25.7 11.6 0.2 0.1
Chained (2000) dollars…………… -89.3 -97.4 -1.0 -1.1 11.7 0.8 0.1 0.0
Personal consumption expenditures:
Current dollars…………………. 4.5 -13.1 0.0 -0.1 -33.6 -33.7 -0.3 -0.3
Chained (2000) dollars…………… 1.9 -10.6 0.0 -0.1 -36.0 -35.7 -0.4 -0.4

Personal Income – October 2008 [PDF]

Personal Income – October 2008 [Text]

Source: Commerce Department, Bureau of Economic Analysis