This report measures consumers' income and how much they are saving -- plus, how much they're spending and where they're spending it.
Negative changes in income can indicate that consumers are, or soon will be, spending less. When consumers don't spend, the economy suffers.
In general, high levels of income lead to strong spending, but other trends may be in play. The report can show increases in income with less spending or increases in spending with decreases in income -- obviously a bad sign.
The report tracks spending in some general areas, such as durable goods, nondurable goods and services.
The inclusion of services makes this an important report to follow. Services include such things as hair cuts, airline tickets and financial services.
"Depending on the month, services make up two-thirds of overall consumer spending, so it is a pretty big component," says Bernard Baumohl, author of "The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investment Opportunities."
The personal income and outlays report does come out later than other indicators, so it doesn't generate as much interest as reports released earlier in the reporting cycle, such as the retail sales report.
The retail sales report is released about two weeks after the month surveyed ends.
It measures all the retail sales for the month -- but not only to consumers. The report does include some nonconsumer elements.
"Building supply stores sell primarily to contractors, not to consumers. Office superstores sell primarily to small business (and) some consumers, but in the retail sales data report they are fully included," says Scott Hoyt, senior director of consumer economics at Moody's Economy.com.
In comparison, the personal income and outlays report includes only consumer spending. The two reports are generally consistent with each other and corroborate findings.
"From an economist's perspective, the consumer spending data is really a better measure of what consumers are buying. But on the other hand, (the personal income and outlays report) comes out two weeks later for the same period. It's just not as high profile an indicator," Hoyt says.
Though the retail sales report does reveal whether consumers are spending or whether that spending is dropping off, the report is subject to large revisions.
Consumer Price Index
The Consumer Price Index, or CPI, is released every month, usually two or three weeks after the month surveyed.