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.
July-Aug, headline PCE inflation was 0.31%. Core PCE inflation, which excludes food & energy prices, was 0.25%. Headline personal income increased 0.24%, or $66.65B, while real disposable personal income/capita increased 0.05%, meaning prices rose faster than after tax income.…
— Joint Economic Committee Republicans (@JECRepublicans) September 30, 2026
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.
A new study from the Joint Economic Committee (JEC) found that household inflation has been lower this presidential term than the last.
The JEC published a data brief on Thursday that reflected that the average household faced $2,881 less in additional costs from rising prices during the first 20 months of President Donald Trump’s second term — from January 2025 through August 2026 — than the first 20 months of former President Joe Biden’s term — from January 2021 through August 2022.
That cost difference amounts to an average reduction of nearly 41%.
“The comparison does not mean prices declined during President Trump’s second term,” stated the JEC. “Rather, the analysis finds that the cumulative increase in household costs was substantially smaller than during the comparable period under President Biden.”
During the first 20 months of Biden, the average American household experienced $7,081 in additional costs. Arizona was above this average. The average Arizona household experienced $8,427 in additional costs during that same time frame.
During the first 20 months of Trump, the average American household experienced $4,200 in additional costs. Arizona was below this average. The average Arizona household experienced $4,000 in additional costs during that same time frame, a reduction of $4,427 from the prior administration.
In Arizona, that cost difference between administrations amounts to an average reduction of nearly 52%.
In December 2025, the White House released an analysis reflecting that states experienced a difference in year-over-year inflation based on the political affiliations of their leadership. Conservative-leaning states experienced an overall average 2.5% inflation rate, whereas liberal-leaning states experienced an overall average 3% inflation rate.
Conservative states experienced an average 3.4% year-over-year inflation rate for housing, 2.5% for food and beverage, 3.5% for energy, and 0.7% for transportation, compared to liberal states experiences of 3.6% inflation rate for housing, 2.7% for food and beverage, 5.2% for energy, and 2.5% for transportation.
The consistent rates of heightened inflation rates under liberal governance remained true when distinguishing states based on the political affiliations of the governor and legislature, and state control.
States led by conservative governors experienced 2.3% year-over-year inflation rate overall, 3.2% inflation rate for housing, 2.4% inflation rate for food and beverage, 2.9% inflation rate for energy, and 0.6% inflation rate for transportation.
States led by liberal governors experienced a 3% inflation rate overall, 3.7% inflation rate for housing, 2.7% inflation rate for food and beverage, 5.3% inflation rate for energy, and 2.1% inflation rate for transportation.
States with conservative legislatures experienced a 2.4% inflation rate overall, 3.3% inflation rate for housing, 2.4% inflation rate for food and beverage, 2.9% inflation rate for energy, and 0.6% inflation rate for transportation.
States with liberal legislatures experienced a 3% inflation rate overall, 3.6% inflation rate for housing, 2.7% inflation rate for food and beverage, 5.1% inflation rate for energy, and 2.5% inflation rate for transportation.
States in which the legislature had neither a conservative or liberal majority experienced a 3.1% inflation rate overall, 4.5% inflation rate for housing, 2.7% inflation rate for food and beverage, 7.7% inflation rate for energy, and 0.9% inflation rate for transportation.
States defined as under conservative control experienced a 2.3% inflation rate overall, 3.3% inflation rate for housing, 2.4% inflation rate for food and beverage, 2.9% inflation rate for energy, and 0.6% inflation rate for transportation.
States defined as under liberal control experienced a 3% inflation rate overall, 3.6% inflation rate for housing, 2.7% inflation rate for food and beverage, 5.4% inflation rate for energy, and 2.7% inflation rate for transportation.
States defined as under neither conservative nor liberal control experienced a 2.8% inflation rate overall, 3.8% inflation rate for housing, 2.7% inflation rate for food and beverage, 4.7% inflation rate for energy, and 0.7% inflation rate for transportation.
Arizona was defined as having a conservative affiliation. The state experienced a year-over-year inflation rate of 2.6% overall, 1.8% for housing, 2.6% for food and beverage, 2.3% for energy, and 1.4% for transportation.
The city of Phoenix was also included as a major metro area for that analysis, but it was defined based on the state’s assigned affiliation of “conservative.” The city experienced a year-over-year inflation rate of 1.4% overall, -0.1% for housing, 1.1% for food and beverage, 6.7% for energy, and 0.8% for transportation.
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The U.S. Consumer Price Index rose 0.4% in August, accelerating from July’s 0.1% increase, while annual inflation remained at 3.4%, according to the latest release from the Bureau of Labor Statistics. Gasoline prices accounted for more than one-third of the monthly increase.
In the Phoenix-Mesa-Scottsdale area, consumer prices increased 2.5% over the year ending in August, below the national rate, but eased back from June’s 2.8%. Local energy prices rose 19.1% over that period, including a 32.5% increase in gasoline prices.
Nationally, gasoline prices increased 3.9% during August, and the broader energy index rose 2.1%. Shelter costs increased 0.3%, while food prices rose 0.1%. Grocery prices were unchanged for the month, and food away from home increased 0.3%.
CPI-U increased by 0.40% in August & rose to 3.40% over the past year. Core CPI, which excludes food & energy, +0.29% in Aug & +2.45% over the past year. Energy inflation +2.10% in Aug & +16.28% over the past year. Food inflation +0.12% in Aug & +2.67% over the past year.…
— Joint Economic Committee Republicans (@JECRepublicans) September 11, 2026
Core inflation, which excludes food and energy, increased 0.3% in August following a 0.2% rise in July. Over the preceding 12 months, core prices increased 2.4%, energy prices rose 16.3%, and food prices increased 2.7%.
The national monthly figures are seasonally adjusted. The annual changes are measured before seasonal adjustment.
The Joint Economic Committee (JEC) Republicans’ August inflation update, released this month, provided calculations to two decimal places. It reported monthly headline inflation of 0.40% and core inflation of 0.29%, compared with Cleveland Federal Reserve forecasts of 0.36% and 0.20%, respectively.
The committee’s calculations placed annual headline inflation at 3.40% and annual core inflation at 2.45%. Its report notes that differences in change figures can result from rounding.
Across the four regions identified in the committee’s accompanying release, annual inflation was highest in the Northeast at 3.9%, followed by the Midwest at 3.6%, the West at 3.2%, and the South at 3.1%. In its release accompanying the update, JEC Republicans reported annual inflation of 3.9% in the Northeast, 3.6% in the Midwest, 3.2% in the West, and 3.1% in the South.
Phoenix-area prices increased 0.5% over the two months ending in August. During that period, local energy prices increased 4.6%, food prices declined 1.6%, and prices excluding food and energy rose 0.5%. The local BLS figures are not seasonally adjusted and cover a two-month period.
Over the year, Phoenix-area food prices increased 1.7%, including a 1.0% increase in grocery prices and a 2.5% increase in food away from home. Local core inflation was 1.3%, while shelter prices declined 0.3%.
Inflation-adjusted earnings were mostly steady in August. Real average weekly earnings for employees on private nonfarm payrolls increased 0.16%, while real average hourly earnings declined 0.09%. Over the year, real hourly earnings declined 0.3% and real weekly earnings increased 0.3%.
Small business optimism edged lower in August as owners reported weaker sales, persistent inflation pressures, and continued difficulty finding qualified workers, according to the latest data from the National Federation of Independent Business (NFIB).
The NFIB Small Business Optimism Index fell to 98.7 in August, down 1.1 points from July’s highest reading since August 2025. Despite the decline, the index remained slightly above its 52-year average of 98.
NFIB’s Uncertainty Index also declined by two points to 89 but remained well above its historical average of 68, suggesting business owners continue to face questions about economic conditions and future investment.
“Uncertainty remains elevated among small business owners as they face a mixed set of challenges with weakened sales, supply chain disruptions, and inflation pressures,” said NFIB Chief Economist Bill Dunkelberg. “While expectations for the overall economy dimmed, Main Street owners remain largely positive in the health of their own businesses.”
#NFIB's August Small Business Economic Trends report shows a slight decline in #SmallBusiness optimism and uncertainty as business owners continue to navigate inflation pressures, weakened sales, and supply chain disruptions.
In Arizona, NFIB State Director Chad Heinrich said small business owners are taking a cautious approach as they evaluate sales, hiring, and future investments.
“Arizona’s small business owners are cautious right now,” Heinrich said. “Sales are down, uncertainty is up, and owners are watching the economy closely before they commit to their next hire or investment.”
Heinrich also pointed to tax conformity measures approved by Arizona lawmakers this year, arguing that reducing tax-related uncertainty removes an additional obstacle for businesses considering expansion.
Nationally, sales showed signs of weakening during August. A seasonally adjusted net negative 9% of owners reported higher nominal sales during the previous three months, a five-point decline from July and the lowest reading since November 2025.
Expectations for better business conditions also fell five points to a net 10%, though the figure remained above the historical average of 4%.
Inflation became a greater concern during the month, with 16% of owners identifying it as their single most important problem, an increase of two points from July.
Inflation is now tied with taxes as the second-most frequently cited problem facing small businesses.
Supply chain issues also remain widespread. Sixty-two percent of small business owners said supply chain disruptions affected their operations to some degree, down only one point from July.
Despite those concerns, most owners continued to give their own businesses relatively positive remarks. Eleven percent rated the health of their business as excellent, while 57% described it as good. Another 28% rated conditions as fair, and 3% as poor.
Hiring conditions also softened in August, although businesses continue to report significant difficultly finding qualified workers.
The NFIB’s Small Business Employment Index declined 0.3 points to 101.8 but remained above the 2025 average of 101.2 and its historical average of 100.
Thirty-five percent of owners reported job openings they could not fill, one point lower than July but still 11 points above the historical average.
Among the 56% of businesses that were hiring or attempting to hire, 82% reported receiving few to no qualified applicants.
Thirty-one percent of owners reported openings for skilled workers, while 13% had openings for unskilled positions.
Hiring plans also cooled. A seasonally adjusted net 17% of owners said they plan to create new jobs over the next three months, down three points from July.
#NFIB's August Jobs Report found that small business hiring and job creation plans eased as summer came to a close, though many owners still struggle to find qualified workers. #SmallBusiness#JobsReport
“Small businesses are slowing down their hiring efforts as the summer comes to an end, with fewer owners reporting job openings or plans to create new positions,” said Dunkelberg. “The pressure to offer competitive wages is still high, but it’s no longer a top challenge for most Main Street employers.”
Labor pressures nevertheless remain elevated compared with historical levels. Twenty-three percent of owners identified labor quality or availability as their top operating problem, down four points from July but 11 points above the historical average.
Labor costs, meanwhile, were identified as the top problem by 7% of owners, the lowest level since March 2021.
Compensation increases remained steady, with a seasonally adjusted net 31% of owners reporting they raised pay in August. A net 18% plan to increase compensation during the next three months.
The August figures present a mixed picture for small businesses heading into the fall: optimism remains slightly above its long-term average and most owners continue to view their individual businesses positively, but weaker sales, elevated uncertainty, inflation, and persistent hiring difficulties continue to weigh on Main Street.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
The Joint Economic Committee released its Monthly Inflation Update for July 2026, showing that consumer prices continued to rise, while real earnings remained mostly steady during the month.
According to the report, the headline Consumer Price Index for All Urban Consumers (CPI-U) increased 0.07% from June to July and rose 3.36% over the previous year.
Core CPI, which excludes food and energy prices, increased 0.22% in July and was up 2.48% from July 2025.
Energy prices declined 1.48% in July but remained significantly higher than a year earlier, with energy price inflation increasing 14.73% over the past 12 months. Food prices increased 0.08% during July and were up 2.98% compared with July 2025.
CPI-U increased 0.07% in July & rose to 3.36% over the past year. Core CPI increased 0.22% & rose to 2.48% over the past year. Energy price inflation was down by 1.48% in July & was up 14.73% over the past year. Food price inflation rose 0.08% & was up 2.98% over the past year.…
— Joint Economic Committee Republicans (@JECRepublicans) August 12, 2026
Inflation also varied across the country. Annual headline CPI inflation was highest in the Northeast at 4.1%, followed by the Midwest at 3.5%. The South recorded annual inflation of 3.2%, while the West had the lowest rate among the four regions at 3.0%.
The inflation report comes less than a week after a disappointing jobs report that showed the U.S. economy unexpectedly lost 23,000 jobs in July. Economists had expected employers to add jobs during the month.
The Bureau of Labor Statistics also sharply revised employment gains for May and June downward by a combined 103,000 jobs, providing a weaker picture of the labor market than previously reported.
The July employment report also showed an unemployment rate of 4.1%, down slightly from June. However, the decline was accompanied by a reduction in labor-force participation, while employment fell in areas including local government, education, and retail trade sectors. Healthcare continued to trend upward.
The combination of persistent inflation and signs of a weakening labor market leaves the Federal Reserve facing a difficult balancing act as it considers its next interest-rate decision.
The Federal Reserve previously voted 9-3 to maintain the benchmark interest rate, and the latest inflation and employment data could further reduce pressure on the central bank to raise rates at its September meeting.
While inflation remains above the Fed’s 2% target, the weaker-than-expected jobs numbers and downward revisions to previous employment gains could give policymakers additional reason to exercise caution.
The Federal Reserve will receive another round of inflation and employment data before its September meeting, giving policymakers a final set of economic data to consider as they weigh continued price pressures against growing signs of a cooling labor market.
The July report also examined changes in workers’ real earnings, which account for the effects of inflation. For all employees on private, non-farm payrolls, real average weekly earnings decreased 0.02% from June to July, while real average hourly earnings declined 0.09%.
Among production and nonsupervisory employees on private non-farm payrolls, real average weekly earnings increased 0.06% during the month. Real average hourly earnings for the group remained unchanged, with a net change of 0.00%.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
