Real disposable income fell 0.3% in September as the household saving rate dropped to 3.8%

US households spent more than their income grew in September: inflation-adjusted disposable income fell 0.3% from August while the personal saving rate dropped to 3.8%, according to the Bureau of Economic Analysis.

What happened

Personal income rose $54.5 billion, or 0.2%, in September, the BEA said in its release on Thursday, October 29. Disposable personal income, which is income after personal current taxes, also rose 0.2%. Personal consumption expenditures, the BEA's measure of household spending, rose $113.1 billion, or 0.5%.

Prices took the difference. The PCE price index rose 0.5% from August and 3.6% from a year earlier; excluding food and energy it rose 0.3% on the month and 3.1% on the year. After adjusting for prices, disposable income fell 0.3% (August: unchanged), and real spending was little changed, up less than 0.1%, after a 0.5% increase in August.

Personal saving was $911.1 billion, and the saving rate, saving as a percentage of disposable income, was 3.8%. The BEA said the income increase mainly reflected higher compensation and government social benefits, led by private wages and salaries and by Medicare.

Why it matters

The saving rate has fallen over the course of 2026. Data compiled by the Federal Reserve Bank of St. Louis from BEA estimates put it at 5.6% in January 2026, 5.1% in September 2025 and 3.8% now, a drop of 1.3 percentage points (computed) over the year. As FinanceInTime reported on October 28, an earlier BEA release showed spending growing about twice as fast as income over 12 months. The September figures extend that pattern: income after taxes grew 0.2% on the month while spending grew 0.5%, and the gap came out of saving.

Using the same St. Louis Fed series, inflation-adjusted disposable income was 1.0% higher (computed) in September than a year earlier, while inflation-adjusted spending was 2.5% higher (computed). Both are chained 2017-dollar levels, which strip out price changes.

The figures show how households paid for the gap but not why they spent more than their income grew; the BEA's release does not give a reason. A lower saving rate means a smaller share of income set aside after spending, which is the mechanical effect of spending rising faster than income.

What to watch

The BEA will publish October personal income and outlays on November 25 at 8:30 a.m. ET, according to the release. The BEA also revised July and August income estimates in this release using updated employment data, so earlier saving rates, including the 4.1% for August that FinanceInTime cited, now stand at 4.0% in the St. Louis Fed series.

If prices keep rising faster than income, the real income decline could continue; if inflation eases, real incomes would hold up better. Both are conditional on data that has not been released, and monthly estimates are revised as new employment and interest data arrive, as the BEA's note on July and August shows.