# Personal Income & Outlays for May 2010

Personal Income and Outlays for May 2010 was released today.

Personal income increased $53.7 billion, or 0.4 percent, and disposable personal income (DPI) increased$49.0 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis.
Personal consumption expenditures (PCE) increased $24.4 billion, or 0.2 percent. In April, personal income increased$59.4 billion, or 0.5 percent, DPI increased $63.7 billion, or 0.6 percent, and PCE increased$1.4 billion, or less than 0.1 percent, based on revised estimates.

Real disposable income increased 0.5 percent in May, compared with an increase of 0.6
percent in April. Real PCE increased 0.3 percent, in contrast to a decrease of less than 0.1 percent.

Below is PCE or consumer spending. Real PCE increased 3.0% this month. PCE is a major component in GDP, taken on a quarterly, annualized average. So, June numbers are not out yet, but it looks like PCE for Q2 2010 will be coming in between 2% and 3% growth. Last GDP report had a 3.0% PCE growth rate.

I want to reference Calculated Risk's PCE analysis. Calculated Risk claims even with zero growth in June for PCE, the C or PCE in Q2 2010 GDP will be 2.3%.

I calculate that if there is no PCE growth for June, PCE would be 2.48% Q2 2010 GDP. Unfortunately CR did not publish his equations or data used. Odds are we have some sort of assumptions differences. The equation I used was compounded annual rate of change, or $((\frac{x(t)}{x(t-1)})^4)-1)100$, where for each quarter, the data was a simple average of the monthly PCE numbers, or $x=\frac{\sum_{i=1}^3PCE_i}3$.

The data used was from the St. Louis Fed.

Personal savings is finally increasing, after a decrease implying people were using their savings to financially survive.

Transfer payments are payment from the government to individuals where no actual services (work) was performed. This includes social security, unemployment insurance, welfare, veterans benefits, Medicaid, Medicare and so on. Below is personal income minus transfer payments.

As you can see, personal income is nowhere near pre-recession or even early recession levels.

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### CR did make a calculation error

He's now corrected his Q2 2010 PCE estimate and it matches mine, assuming there is no change in June. Still, it's probably a good thing there are at least 2 bloggers out there who are actually cranking the numbers directly. Beats the typical MSM just grabbing the first line in the report and writing that up!

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