Personal consumption expenditures rose 1% in September, according to the most recent data release from the Bureau of Economic Analysis. The strong gains were mainly due to higher spending on new motor vehicles and household utilities in September. Adjusted for inflation, personal spending was up by 0.6%, after a 0.1% decline in August. Personal income climbed 0.4% in September, largely driven by strong gains in wages and salaries.
Disposable personal income, income remaining after deducting personal income taxes, was virtually unchanged after accounting for inflation in September. Nevertheless, disposable personal income is 1.3% higher than a year ago.
Personal savings slipped to $442 billion in September, accounting for 3.1% of disposable income. 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. The savings rate has been in a downward trend since 2016.