Core PCE Price Index (Dec) Actual 0.0%, Expected 0.0%, Previous 0.0%
Personal Spending (Dec) Actual -1.0%, Expected -0.9%, Previous -0.8% (Revised from -0.6%)
Personal Income (Dec) Actual -0.2%, Expected -0.4%, Previous -0.4% (Revised from -0.2%)
Release Explanation: Core Personal Consumption Expenditures (PCE) measures price changes in Consumer goods and services excluding food and energy, and consists of the actual and imputed expenditures of households. It includes data pertaining to Durables, non-Durables, and Services. It is essentially a measure of goods and services targeted towards individuals and consumed by individuals, therefore it is very important in assessing the sentiment of the Consumer, especially in a Service based economy. Also included with this report is data on personal spending and income. This is a very important release.
The impact from this release affects the CPI, Retail Sales, Housing and Consumer Confidence numbers. This is released at the same time as Personal Spending and Personal Income reports, and all three complete a very strong picture of consumer sentiment. Named by the Federal Reserve as their preferred measure of near-term Inflation.
A currency will be greatly impacted by this report as it reveals the strength of the public in their ability, or desire, to spend or save, and therefore how strong economic growth will be going forward. This report also contains monthly data on incomes.
Trade Desk Thoughts: Spending slowed sharply in December as weakness in the job market intensified. Personal consumption fell 1.0% in December, worse that the 0.9% decline economists had expected. November's decline was revised lower to 0.8%.
For the year, spending in 2008 rose 0.3%, the smallest increase since 0.2% in 1991.
In real terms, adjusted for inflation, spending decreased 0.5% in December after increasing 0.3% in November due to falling gasoline prices and heavy discounting by retailers.
Purchases of durable goods decreased 0.8% after increasing 1.0% in November, while purchases of nondurable goods decreased 1.8% after November's 0.9% increase. Purchases of services increased 0.1% after a decrease of less than 0.1% in November.
Personal income decreased 0.2% in December while disposable personal income (DPI) decreased 0.2%. In real terms, DPI increased 0.3% after a 0.8% increase in November. Income climbed 3.7% last year, the smallest since a 3.2% increase in 2003.
Personal saving as a percentage of disposable personal income was 3.6% in December, the highest since 4.8% in May 2008. It was 2.8% in November. The saving rate of 1.7% in 2008 was the largest since 2.1% in 2004.
The price index for personal consumption expenditures fell 0.5% after a 1.1% drop in November. The PCE price index excluding food and energy, or core PCE, was unchanged for a third straight month.
In the year to December, the PCE price index rose 0.6%, after a 1.4% advance in November. The PCE price index excluding food and energy rose 1.7%, after a 1.9% yearly increase in November.
Forex Technical Reaction: S&P futures were recently trading about 1.8% lower. Oil and gold were declining on the day and the dollar was trading higher against most currencies except the yen.