Personal consumption expenditures was up by 0.5% in September following a 0.1% dip in August, according to the most recent data release from the Bureau of Economic Analysis. Personal income edged up by 0.3%, largely driven by an increase in employee compensation.
Disposable personal income – income remaining after deducting personal income taxes – continued its steady growth. In September, disposable personal income was 2.1% higher than a year ago.
In September, 5.7% of disposable income went to personal savings, down from 5.8% in August. The savings rate was on a downward trend from earlier 2016, when it peaked at 6.2%. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. However, this process of deleveraging held back GDP growth due to reduced consumption.