Consumer Spending Climbs in August as Inflation Stays Elevated

In August 2026, U.S. consumer spending rose despite inflation remaining above the Federal Reserve’s 2% target, according to the Joint Economic Committee (JEC). The Personal Consumption Expenditures (PCE) price index, a key inflation gauge, increased 0.31% from July to August, while core PCE inflation, which excludes food and energy, rose 0.25%. Over the past year, headline PCE inflation reached 3.42%, and core PCE inflation stood at 3.01%, both above the Fed’s annual target.

Despite inflationary pressures, inflation-adjusted personal consumption expenditures climbed 0.55%, or about $92.82 billion. Spending on goods surged 1.33%, with durable goods up 1.93% and nondurable goods increasing 1.02%. Services spending rose 0.20%, or $22.27 billion. Major categories like gasoline, motor vehicles, housing, and healthcare saw significant increases, with housing expenditures reaching approximately $4 trillion annually, up 4.51% from the previous year.

The personal savings rate dropped 0.5 percentage points to 4.1%, while personal income increased 0.24%, or $66.65 billion. Real disposable personal income per capita fell 0.05%, indicating that after-tax income lagged behind price increases. The JEC also revised its second-quarter GDP estimate upward to 2.22%, with consumer spending contributing 2.5 percentage points to growth.

The data suggests that consumer spending continued to drive economic activity into August, even as households saved less and faced higher inflation. The updated GDP figures show that the U.S. economy expanded at an annualized rate of 2.22% in the second quarter, with current-dollar GDP reaching approximately $32.56 trillion.