U.S. consumers are continuing to spend at a pace that is outstripping income growth, raising questions about how long household demand—a key driver of economic growth—can remain strong, Bloomberg writes.
Inflation-adjusted consumer spending rose 2.6% in November from a year earlier, while disposable personal income increased just 1%, the smallest annual gain since 2022. As a result, the personal saving rate has fallen to a three-year low, signaling that more households are relying on savings and credit to cover expenses.
Economists say slower wage growth and persistent inflation are squeezing household budgets, particularly for middle- and lower-income consumers. While higher-income households, supported by stock-market gains, are helping sustain overall spending, analysts caution that this dynamic may not be durable. Larger tax refunds expected in 2026 could provide short-term support, but many consumers may instead use the cash to pay down debt and rebuild savings—potentially cooling future spending growth.
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