American consumer spending rose in August, as reported by Congress’s Joint Economic Committee (JEC), while inflation remained above the Federal Reserve’s target of 2%. The JEC’s August Monthly Expenditures Update highlighted that the Personal Consumption Expenditures (PCE) price index increased by 0.31% from July to August.
Read More
Core PCE inflation, which excludes food and energy categories, saw a 0.25% rise during this period. Year-over-year, headline PCE inflation reached 3.42%, exceeding the Fed’s 2% target, while core PCE inflation was reported at 3.01%.
Despite inflationary pressures, consumer spending increased. Adjusted for inflation, personal consumption expenditures rose by 0.55%, amounting to approximately $92.82 billion. Spending on goods surged by 1.33%, contributing $76.44 billion, while spending on services increased by 0.20%, or $22.27 billion. Within the goods category, spending on durable goods rose by 1.93%, and nondurable goods by 1.02%.
Notable increases were reported in several household expenditure categories. Spending on gasoline and energy goods rose 4.32% from July and 23.55% compared to August 2025. Expenditures on motor vehicles and parts increased by 2.53%, and transportation services saw a rise of 1.66%. Housing and utilities accounted for about $4 trillion in annual spending, up 4.51% from the previous year, while health care expenditures reached around $3.86 trillion, marking a 6.76% annual increase.
The report also indicated a decrease in the personal savings rate, which fell by 0.5 percentage points to 4.1%. Personal income rose by 0.24% (approximately $66.65 billion), but real disposable personal income per capita declined by 0.05%, reflecting that inflation outpaced after-tax income growth.
Additionally, the JEC's third estimate for second-quarter gross domestic product (GDP) revealed that the U.S. economy expanded at an annualized inflation-adjusted rate of 2.22%, an upward revision of 0.74 percentage points from previous estimates. Current-dollar GDP increased at an annualized rate of 8.49%, with the economy's output valued at about $32.56 trillion, an increase of $656.8 billion from the first quarter.
Consumer spending significantly contributed to economic growth in the second quarter, adding about 2.5 percentage points to real GDP growth, while nonresidential fixed investment contributed another 1.2 percentage points. Adjustments in private inventories and net exports reduced overall growth by approximately 0.5 and 1.1 percentage points, respectively.
The updated figures confirm that consumer spending continued to bolster economic activity in August, despite persistent inflation and a lower savings rate.