U.S. personal income continued to grow in September 2025, but consumer spending showed signs of moderation, according to new data released by the Bureau of Economic Analysis.
Personal income increased $94.5 billion (0.4%), driven primarily by higher employee compensation and gains in income from financial assets. Disposable personal income (DPI) rose $75.9 billion (0.3%), while personal consumption expenditures (PCE) increased $65.1 billion (0.3%).
The month’s spending gains were concentrated in services, which rose $63.0 billion, whereas goods spending increased by just $2.1 billion. Personal outlays, including consumption, interest payments, and transfer payments, climbed $70.7 billion, leaving total personal saving at $1.09 trillion. The overall personal saving rate held steady at 4.7%, highlighting a cautious consumer backdrop going into Q4.
Income Strength Contrasts with Flat Real Spending
While nominal incomes rose, inflation-adjusted measures reflected a softer consumer environment.
- Real disposable personal income increased only 0.1%.
- Real PCE was unchanged at 0.0%.
This indicates that inflation absorbed nearly all of September’s nominal spending growth.
Inflation Picks Up but Remains Below Peak Levels
The PCE price index, the Federal Reserve’s preferred inflation gauge, rose 0.3% in September. Excluding food and energy, core PCE increased 0.2%.
Year-over-year, both headline and core PCE rose 2.8%, continuing a gradual deceleration from earlier highs but still above the Fed’s 2% target.
September’s Key Monthly Changes at a Glance
- Personal income: +0.4%
- Disposable personal income: +0.3%
- Real disposable income: +0.1%
- Personal consumption expenditures: +0.3%
- Real PCE: 0.0%
- PCE price index: +0.3%
- Core PCE: +0.2%
