April data shows Americans saving less to sustain spending amid persistent inflation and stagnant real income growth.
US consumer spending rose a modest 0.1% in April after adjusting for inflation, as households dipped into savings to offset rising costs. The personal savings rate fell to 2.6%, its lowest level since 2020, down from 3.2% in March.
The Federal Reserve’s preferred inflation gauge, the PCE price index, climbed 3.8% year-over-year, the highest since 2023. Core PCE, excluding food and energy, increased 3.3%. Inflation-adjusted disposable income declined, underscoring the strain on household budgets.
Despite elevated prices, consumer demand remained positive, though the reliance on savings signals growing financial pressure. Wage growth continues to lag inflation, further squeezing purchasing power.