U.S. nominal spending rose in September while real spending was nearly flat: prices and quantities diverged

The September report released by the U.S. Bureau of Economic Analysis (BEA) on October 29 showed personal income increasing by $54.5 billion, or 0.2%, from the previous month; disposable personal income after taxes increased by $52.7 billion, also 0.2%. Personal consumption expenditures in current dollars rose by $113.1 billion, or 0.5%, including an increase of approximately $35.1 billion in goods spending and approximately $78.1 billion in services spending. These dollar amounts and their changes are presented at seasonally adjusted annual rates, not as the dollar totals actually accumulated during September alone; the percentages shown are monthly changes. Interpreting an increase in nominal amounts as a substantial expansion in quantities purchased overlooks price changes.¹

Archival photograph: May 4, 2023, Las Vegas, Nevada, United States. The interior of a Smith’s supermarket in Las Vegas, Nevada. Photograph and copyright: Harrison Keely; CC BY 4.0.

Nominal growth and real quantities purchased

Adjusted for prices, real personal consumption expenditures increased by less than 0.1% in September, while real disposable income fell 0.3%. Over the same period, the PCE price index rose 0.5% month over month, or 0.3% excluding food and energy. Compared with the same month a year earlier, the headline PCE price index increased 3.6% and the core index rose 3.1%. Month-over-month changes, year-over-year changes and the annualized quarterly rate in the third-quarter report are three different measures. One cannot be substituted for another to explain whether “inflation is rising or falling.”¹

Savings and revisions require their definitions to be retained

The report also estimated personal saving in September at an annual rate of $911.1 billion, with a saving rate of 3.8% of disposable income. This is an aggregate accounting measure; it does not mean every household has the same capacity to save. BEA said July and August income data were updated to incorporate new information, including employment statistics; personal interest income also used updated Treasury data. Comparisons between individual months therefore need to account for changes in the comparison base.¹

The most important divergence is this: a rise in amounts paid does not mean quantities actually purchased increased by the same proportion. PCE includes consumption paid for by individuals and on their behalf; it is not equivalent to each household's ledger of direct cash payments.² If prices rise faster than nominal income, purchasing power can be squeezed. One month's data, however, are not enough to determine that the consumption trend has turned. Subsequent assessments need to consider employment, wages, retail data and the next PCE release together, rather than using the strong annualized growth rate in third-quarter GDP as a substitute for an independent assessment of September income and real spending.

Source notes

1. 2026-10-29 08:30 EDT · Personal Income and Outlays, September 2026 · U.S. Department of Commerce, Bureau of Economic Analysis. ↩ ↩² ↩³

2. The page does not specify a fixed publication date · Personal Income and Outlays: Additional Information · U.S. Department of Commerce, Bureau of Economic Analysis; accounting definitions and explanation of seasonally adjusted annual rates. ↩