Inflation
PCE — July 2026
Personal Income and Outlays · released August 26, 2026 · 8:30 AM ET · Source: U.S. Bureau of Economic Analysis
The read · narrated
The read
Americans spent more money in July. They didn’t get more for it. Spending rose two tenths of a percent — and prices rose two tenths. Take the prices out, and spending didn’t move at all. Zero point zero, the weakest month since January.
And it wasn’t for lack of money coming in. Income after taxes rose half a percent, four tenths after inflation. The money arrived, the spending didn’t follow, and the difference had to go somewhere. It went into savings.
Though look at what that income was. Of the hundred and fifteen billion dollars, forty-seven was pay. The rest was government benefits — led by Medicaid and Medicare — dividends, and a tax bill that fell. Less than half came from working.
The saving rate rose to three percent, from two point six — the first increase in six months. Before it, five straight monthly declines.
Our July read closed on one question: how long can a consumer keep funding spending by drawing down savings? July answered it. They stopped.
Look at what they stopped buying. Services spending rose eighty-six billion dollars. Goods fell fifty. Some of that is cheaper gasoline — but adjusted for inflation, goods volumes fell anyway. Big-ticket durables dropped one point four percent.
Meanwhile the price side turned back up. Headline prices fell a tenth in June; in July they rose two tenths. Core did the same, and over the year sits at three point three percent. The stickiest part — services minus energy and housing — ran three point eight.
Now split the bond market’s answer apart. Wednesday’s growth read noted the two-year barely moved. Here’s what was inside it. The ten-year rose two basis points, and every one of them was the real yield. Inflation compensation moved zero. Our Weekly found that same split in July.
Two signals for the Fed, pointing opposite ways. Demand cooled — volumes flat, savings rebuilding. Prices firmed — core and the sticky part both up. The standing line from our last two reads survives this one: no case for tightening, and none yet for cutting.
One month is one month. Watch whether the saving rate keeps climbing — a pause, or a turn. And the Fed decides September sixteenth, two weeks before the next print revises all of it.
The numbers
| Measure | Latest | Trend |
|---|---|---|
| Headline PCE (year over year) | +3.7% · July | ▲ held at 3.7%, but the monthly pace turned up: −0.1% to +0.2% |
| Core PCE (ex food & energy) | +3.3% · July | ▲ held at 3.3%; the sticky part ran hotter, at 3.8% |
Personal Income and Outlays, July 2026, U.S. Bureau of Economic Analysis, released August 26, 2026 (BEA 26–39). All monthly percent changes are BEA’s published figures from the release’s Personal Income and Related Measures table, computed here from the unrounded indexes and rounded once at display. The month: current-dollar personal income +0.4%, current-dollar disposable personal income (DPI) +0.5%, real DPI +0.4%, current-dollar consumer spending +0.2%, real consumer spending 0.0% (BEA: “increased $1.3 billion, less than 0.1 percent”), PCE price index +0.2% after −0.1% in June, and core PCE +0.2% after +0.1%. Real spending of 0.0% is the weakest month since January 2026 (−0.2%). Over the year the PCE price index rose 3.7% and core 3.3%, both unchanged from June. Services excluding energy and housing — the “sticky part,” sometimes called supercore — rose 0.28% on the month and 3.85% over the year, which displays as 3.8% and runs above core. On the income composition: the $115.1 billion rise in personal income was not primarily a pay increase. Compensation contributed $46.8 billion (wages and salaries alone $39.1 billion), personal current transfer receipts $39.7 billion (government social benefits $30.2 billion, led by Medicaid and Medicare per BEA’s Technical Notes), and personal income receipts on assets $19.9 billion (led by personal dividend income). Personal current taxes fell $10.8 billion, which is why DPI rose more ($125.9 billion) than personal income did. Less than half the gain came from working — a distinction that matters, because transfer- and asset-funded income is a different quality of support than wage growth. The saving rate was 3.0% in July against 2.6% in June, its first increase after five consecutive monthly declines (January 4.4% through June 2.6%). It is a residual — saving divided by DPI — and it is revised. On the spending split: services spending rose $86.2 billion while goods fell $49.9 billion. The release’s spending chart is in current dollars, so part of the goods decline is simply cheaper fuel (gasoline and other energy goods, at −$14.0 billion, is the single largest negative line, and gasoline prices fell 2.7% on the month). But the inflation-adjusted twin fell too: real goods −0.6% and real durable goods −1.4%, so the volume decline is genuine and not a price artifact. Market reaction: on August 26 the 10-year Treasury rose 2 basis points, of which the real (TIPS) yield accounted for 2 and the 10-year breakeven — the market’s priced inflation — accounted for 0; the 5-year breakeven and the 5-year, 5-year forward were also unchanged (Federal Reserve H.15 via FRED). This is the inverse of the June print, where the whole move was priced inflation and none of it real. The decomposition is recomputed each month and should not be carried forward. Note on construction: our GDP read of the same morning cited core PCE at 3.6% — that is the quarterly price index inside the national accounts, annualized, for the second quarter. The 3.3% here is the monthly index measured against the same month a year earlier. Different constructions of the same concept; they are not comparable to one another. Next release: September 30, 2026, at 8:30 AM ET, which arrives with BEA’s 2026 annual update of the National, Industry and Regional Economic Accounts — beginning on the same day for the first time — and will revise monthly personal income and outlays history. The Federal Open Market Committee meets September 16–17, before that revision. Next report: Wednesday, September 30, 2026, 8:30 AM ET.