Inflation Brings Savings Rate Down In September

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The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income increased 0.4% in September, the eighth consecutive monthly increase of this year. Gains in personal income are largely driven by increases in compensation of employees and personal income on assets. Real disposable income, income remaining after adjusted for taxes and inflation, stayed flat in September after a 0.2% increase in August.

Personal consumption expenditures (PCE) climbed 0.6% in September after a 0.6% increase in August, largely due to more spending on housing, international travel and air transportation. Real spending, adjusted to remove inflation, inched up 0.3% in September.

The personal savings rate plunged to 3.1% in September, compared to the 33.8% savings rate in April 2020. As Inflation almost wiped out compensation gains, people are dipping into savings to support spending.

 

 



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