Inflation
PCE — September 2026
Released October 29, 2026 · 8:30 AM ET · Source: U.S. Bureau of Economic Analysis
The read · narrated
The read
This month the Fed upgraded one word about the economy: solid became strong. Consumers are most of that economy. So — is the consumer strong?
In dollars, yes. Spending rose half a percent in September.
Now take prices out. They also rose half a percent. So the volume — what people actually bought — barely moved. Goods fell. Services edged up.
Our retail sales read found most of September’s new dollars went to the gas pump. Across all spending, gasoline and other fuels took forty percent — and people bought slightly less of them. Outside food and energy, volume was flat too.
To be fair to strong: the same morning, GDP showed consumer spending growing near four percent over the summer quarter. Strong fits the summer. September is where it paused.
So what paid for it? Income after taxes rose two tenths. Prices, five. Real income fell three tenths — the weakest month since April. Over the year, real income is up one percent. Real spending, two and a half.
The gap comes out of savings. The saving rate fell to three point eight — from five point six in January, and the lowest since October twenty twenty-two.
The last time saving ran this low, in twenty twenty-two, spending didn’t crack. Inflation cooled, real incomes recovered, and the cushion refilled. That’s the counterexample — and the condition. This September, prices sped up and real income fell.
Prices matter to the Fed on their own. Last month we said watch core’s three-month pace — it was running near two. Now: two point nine.
The bond market got GDP and this report together. By the close, the two-year yield, the one that tracks the Fed’s path, was six basis points lower. On the day, it didn’t price a firmer Fed.
So — strong? Over the summer, consumers spent like it. In September, they held their volume by saving less while real income fell. That’s not strength. That’s a consumer hanging in. If the case for a second hike rests on demand, the funding under it is thin. If it rests on prices, core is back near three.
The number to watch is real income. October’s report lands November twenty-fifth. The Fed decides December ninth.
| Measure | Latest | Trend |
|---|---|---|
| PCE prices | +0.5% m/m · 3.6% y/y | ▲ from 3.4% in August |
| Core PCE prices | +0.3% m/m · 3.1% y/y | ▲ 2.9% annualized over three months, from 2.0% |
| Real consumer spending | 0.0% m/m · September | ▼ dollars +0.5%; saving rate 3.8%, lowest since 2022 |
Personal Income and Outlays, September 2026, U.S. Bureau of Economic Analysis, release BEA 26–46, October 29, 2026. Figures are from the BEA NIPA API (Tables 2.6, 2.8.4, 2.8.5 and 2.8.6), tied out against the release; the saving-rate history is from FRED (PSAVERT, current vintage). Dollars and volume. Personal consumption expenditures rose 0.5% ($113.1 billion at an annual rate) in current dollars and less than 0.1% ($2.6 billion) in chained dollars; the PCE price index rose 0.5%. Real spending on goods fell 0.3% and on services rose 0.2%. Gasoline and other energy goods rose $45.7 billion in current dollars, 40% of the total increase, and fell 0.1% in chained dollars; real spending excluding food and energy was unchanged. Income. Disposable personal income rose 0.2% in current dollars and fell 0.3% in chained dollars, the largest monthly decline since April 2026. BEA attributes the $54.5 billion rise in personal income mainly to compensation, led by private wages and salaries, and to government social benefits, led by Medicare. Over twelve months, real disposable income rose 1.0% and real spending 2.5%. Saving. The personal saving rate was 3.8%, from 4.0% in August (first published as 4.1%) and 5.6% in January; on current data the lowest since October 2022 (3.6%). In 2022 the rate reached 2.4% (June); real spending rose from a year earlier in every month of 2023, real disposable income turned from −4.5% (June 2022) to +7.3% (June 2023) year over year, and the saving rate returned above 6% in 2023. Prices. Excluding food and energy, the PCE price index rose 0.3% in September and 3.1% from a year earlier. Annualized from the core index: 2.9% over the three months to September (from June). Our September 30 read cited 2.0% for the three months to August; on revised data that figure is 2.2%. The summer quarter. The advance estimate of third-quarter GDP, released the same morning, showed real personal consumption expenditures rising at a 3.8% annual rate. The bond market. The 2-year Treasury yield (Treasury.gov daily par curve) closed at 4.61% on October 29, from 4.67% on October 28; GDP, PCE and weekly jobless claims were released together at 8:30 AM ET. The Federal Reserve held its target range at 3.75%–4.00% on October 28 and next decides on December 9. Personal Income and Outlays for October is scheduled for November 25.