Personal income measures income from all sources. The largest component of total income is wages and salaries, a figure which can be estimated using payrolls and earnings data from the employment report. Beyond that, there are many other categories of income, including rental income, government subsidy payments, interest income, and dividend income. Personal income is a decent indicator of future consumer demand, but it is not perfect. Recessions usually occur when consumers stop spending, which then drives down income growth. Looking solely at income growth, one may therefore miss the turning point when consumers stop spending.
The income report also includes a section covering personal consumption
expenditures, also known as PCE. PCE is comprised of three categories: durables,
nondurables, and services. The retail sales report will provide a good read on
durable and nondurable consumption, while service purchases tend to grow at a
fairly steady pace, making this a relatively predictable report, and ranking it
well below retail sales in terms of market importance.