U.S. Personal Income and Spending Both Rise 0.7 Percent in May

Overview of May Economic Indicators

According to the U.S. Bureau of Economic Analysis, personal income rose by $181.6 billion, or 0.7 percent at a monthly rate, in May. This followed a flat reading for the prior month. Disposable personal income, which subtracts personal current taxes from personal income, increased by $164.9 billion, also equivalent to a 0.7 percent gain.

Personal consumption expenditures advanced by $156.1 billion, matching the 0.7 percent pace recorded for both income measures. Personal outlays, which include personal consumption expenditures along with personal interest payments and personal current transfer payments, rose by $159.9 billion. These figures indicate that households continued to increase spending in line with their income growth during the month.

Saving Behavior and the Personal Saving Rate

Personal saving totaled $704.2 billion in May. The personal saving rate, defined as personal saving as a percentage of disposable personal income, stood at 3.0 percent. This rate reflects the share of after-tax income that households set aside rather than spent.

The increase in disposable personal income outpaced the rise in personal outlays by a modest margin, supporting the observed saving level. Compared with April, when current-dollar disposable personal income declined by 0.1 percent and real disposable personal income fell by 0.5 percent, May represented a clear improvement in household financial flows.

Composition of Income and Spending Gains

The rise in current-dollar personal income was driven primarily by higher farm proprietors’ income and compensation. Within compensation, private wages and salaries provided the leading contribution, consistent with employment data from the Bureau of Labor Statistics. The increase in farm proprietors’ income was linked to government payments under the American Relief Act of 2025, including a second round of Supplemental Disaster Relief Program payments issued by the U.S. Department of Agriculture.

On the spending side, the $156.1 billion increase in current-dollar personal consumption expenditures consisted of a $94.3 billion rise in services and a $61.8 billion gain in goods. Real personal consumption expenditures, adjusted for price changes, grew by $43.8 billion, or 0.3 percent. This real increase followed no change in the preceding month, indicating a modest acceleration in underlying consumption volume.

Inflation Trends as Measured by the PCE Price Index

The PCE price index rose 0.4 percent in May, matching the pace of the prior month. Excluding food and energy, the index increased 0.3 percent, the same rate as in April. These monthly changes contributed to year-over-year figures showing the overall PCE price index up 4.1 percent from May of the previous year, while the core index excluding food and energy advanced 3.4 percent over the same period.

The persistence of these inflation readings, particularly the core measure remaining above 3 percent on an annual basis, underscores ongoing price pressures even as real consumption posted a positive monthly gain. The data suggest that while nominal spending and income grew at the same rate, inflation continued to erode some of the real purchasing-power improvement for households.

Revisions and Technical Adjustments

The estimates for January through April have been revised to incorporate updated data from the Bureau of Labor Statistics’ Current Employment Statistics survey. Revisions to Social Security benefits reflect updated payment information from the Social Security Administration, and the Medicaid benefits revision incorporates new data from the Centers for Medicare and Medicaid Services. Such updates are routine as more complete source information becomes available.

Separately, the PCE price index for legal services was adjusted for January and March, but no changes were made for February, April or May. These selective adjustments reflect the Bureau’s methodology for incorporating refined source data into its estimates of gross domestic product and related measures.

Upcoming Annual Updates and Next Release

The Bureau noted that its 2026 annual updates for national, industry, regional and county statistics will begin on the same day for the first time, September 30, 2026. These updates will cover gross domestic product, gross domestic income, GDP by industry, monthly personal income and outlays, and related regional figures. Improvements in concurrent production processes are expected to affect all three sets of accounts.

The next monthly release of personal income and outlays data, covering June, is scheduled for July 30, 2026. At that time, the May figures released today will be superseded. Historical data from this release will remain accessible through the Bureau’s data archive.

Source

U.S. Bureau of Economic Analysis published this record on 2026-06-25. Pennington Financial accessed it on 2026-10-18.