By Ethan Faverino |
American consumer spending increased in August as inflation remained above the Federal Reserve’s 2% target and the personal savings rate declined, according to the latest economic updates released by Congress’ Joint Economic Committee (JEC).
The JEC’s August Monthly Expenditures Update reported that the Personal Consumption Expenditures (PCE) price index, a key inflation measure used by the Federal Reserve, increased 0.31% from July to August.
Core PCE inflation, which excludes the more volatile food and energy categories, increased 0.25% during August.
Over the past year, headline PCE inflation reached 3.42%, remaining above the Federal Reserve’s annual target of 2%. Core PCE inflation registered 3.01% over the same period.
Despite continued inflationary pressures, consumer spending increased during August. Inflation-adjusted personal consumption expenditures rose 0.55%, representing an increase of approximately $92.82 billion.
Spending on goods accounted for much of the increase, rising 1.33%, or $76.44 billion, while spending on services increased 0.20%, or $22.27 billion. Within the goods category, spending on durable goods rose 1.93%, while spending on nondurable goods increased 1.02%.
Several major household expenditure categories also recorded increases during August.
Spending on gasoline and other energy goods increased 4.32% from July and 23.55% compared to August 2025. Motor vehicles and parts expenditures rose 2.53% for the month, while transportation services increased 1.66%.
Housing and utilities remained one of the largest household spending categories, accounting for approximately $4 trillion in annualized expenditures, an increase of 4.51% from the previous year. Health care expenditures reached approximately $3.86 trillion, representing a 6.76% annual increase.
Meanwhile, the report indicated that Americans saved a smaller portion of their income during August.
The personal savings rate declined by 0.5 percentage points to 4.1%, while personal income increased 0.24%, or approximately $66.65 billion.
Real disposable personal income per capita declined 0.05%, indicating that inflation-adjusted after-tax income fell slightly during the month.
The JEC also released its third estimate of second-quarter gross domestic product (GDP), reporting that the U.S. economy expanded at an annualized inflation-adjusted rate of 2.22%.
The latest estimate represents an upward revision of 0.74 percentage points from the previous estimate.
Current-dollar GDP increased at an annualized rate of 8.49%, with the annualized dollar value of economic output reaching approximately $32.56 trillion during the second quarter, up $656.8 billion from the first quarter.
Consumer spending was a major contributor to economic growth during the quarter, adding approximately 2.5 percentage points to real GDP growth.
Nonresidential fixed investment contributed another 1.2 percentage points, while changes in private inventories and net exports reduced overall growth by approximately 0.5 and 1.1 percentage points, respectively.
The updated figures show that consumer spending continued to support economic activity during the second quarter and into August, even as inflation remained elevated and households devoted a smaller share of their income to savings.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
