Wall Street Greek: Economic Data: Personal Income & Outlays, Michigan Sentiment

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Economic Data

Today's economic data includes two important metrics, the Personal Income & Outlays Report and the Reuters/University of Michigan Consumer Sentiment reading. On the whole, the economic data released offered more reason for rise than fall, but high profile news bits out of China and the Bank of England quelled any rally fire that might have sparked to start the day.

Personal Income & Outlays

Personal Income jumped more than expected in May, though driven by a predictable catalyst. Income soared 1.4%, against expectations for a 0.4% rise, and surpassing the revised 0.7% April increase. However, the driver behind the gains was not a sustainable one. The American Recovery and Reinvestment Act of 2009 was attributed for the increase by the Bureau of Economic Analysis, the reporters of the data. Excluding tax breaks and social government payments, Disposable Personal Income only rose 0.2% (versus 1.6% reported for DPI in May). The ongoing factor in this metric, private wage and salary disbursements, decreased in May, driven by declines in manufacturing and goods producing sectors.

Spending did not benefit as much as might be hoped given the income boost. Instead, the savings rate expanded. Personal Consumption Expenditures increased just 0.3%, matching economists' forecast, though compared against a fractional decrease in April. The reason for this mismatch in income and spending was savings. The Savings Rate gained to 6.9% in May, versus 5.6% in April. The savings rate is personal savings as a percentage of disposable personal income. It is anticipated by some that demand is being pent up, and savings might ease as the economy recovers, allowing for a later spending jolt.

The Core PCE Price Index, the Fed's favored inflation gauge, calmed in May, to a 0.1% rise that matched expectations. The soft increase compared favorably to April's 0.3% increase.

Michigan Consumer Sentiment

Reuters/University of Michigan Consumer Sentiment came in higher than expected, and recorded further gain from its last check. Recent investment euphoria has run dry, so we speculated the sentiment measure might moderate in its improvement rate. However, the latest reading showed sentiment at 70.8, above consensus expectation for 69.0 (69.7 by Bloomberg), and higher than the latest reading of 69.0.

Corporate News Drivers

Friday's EPS schedule includes news from AZZ Inc. (NYSE: AZZ), Gerber Scientific (NYSE: GRB), KB Home (NYSE: KBH), Logility (Nasdaq: LGTY) and Shaw Communications (NYSE: SJR).

Overseas Markets

China repeated its call for a super sovereign currency to replace the dollar standard. The Bank of England said financial institutions were still susceptible to further shocks. Asia rose on the day, while Europe languishes at last check.

Asia: