Consumer
Written October 1, before the latest jobs report, retail sales and consumer sentiment. The numbers and charts on this page are current; figures in the text may not be.
Spending is still growing, with less income behind it.
Yes: retail sales rose 5.36% in August from a year earlier, up from 4.4% in July. Income growth after inflation slowed to 1.3% and the savings rate fell to 4.1%, its lowest since November 2022.
The Briefing · Written October 1, 2026 · Numbers and charts update with each release
Retail sales growth of 5.36% runs well ahead of income growth after inflation of 1.3%
Retail sales and real disposable income, year-over-year %
Sources: Census (RSXFS), BEA (real disposable personal income).
Shoppers are spending more than a year ago. Retail sales growth was 5.36% in August, against 4.13% a year earlier and a three-month average of 5.31%. The peak was 7.05% in May. Income growth after inflation was 1.3% in August, below 1.49% in July and 1.73% a year earlier. Spending is growing faster than income, and the savings rate shows the gap: 4.1% now, against 5.2% a year ago, so households are setting aside less of their income.
The mood is weaker than the spending. Consumer sentiment was 51.7 in August, down from 55.2 in July and 58.2 a year ago. Average hourly earnings grew 3.09%, 0.27 percentage points below inflation of 3.35%. Unemployment at 4.1% is the one steady support, unchanged from July. The read would change if retail sales growth fell below 4%, compared with 4.4% in July and 5.36% in August, or if unemployment rose from 4.1%.
What 5.36% retail sales growth means for you
Paychecks are growing more slowly than prices
Hourly earnings grew 3.09% in August while consumer prices rose 3.35%. Pay therefore sits 0.27 percentage points below inflation.
Households are setting aside less of their income
The savings rate was 5.2% a year ago and is 4.1% now. That is the lowest reading since November 2022.
The job market is holding
Unemployment was 4.1% in August, the same as July and below 4.3% a year ago. It peaked at 4.5% in November 2025.
The next test: what would change the answer
Moderate confidence. Spending is growing at 5.36%, but income growth after inflation is 1.3% and the savings rate is 4.1%. Spending is running ahead of income.
Retail sales growth falling below 4%, compared with 4.4% in July and 5.36% in August
The savings rate falling below 4.1%, its lowest since November 2022
Unemployment rising above 4.1%, where it has been for two straight months
Questions readers ask
Are Americans still spending?
Yes. Retail sales rose 5.36% in August from a year earlier, up from 4.4% in July and 4.13% a year ago. The high of the past two years was 7.05% in May.
Is consumer spending growing faster than income?
Yes. Retail sales grew 5.36% while income after inflation grew 1.3% in August. Income growth was 1.73% a year earlier.
What is the US savings rate now?
The personal savings rate was 4.1% in August, down from 4.6% in July and 5.2% a year ago. It is the lowest since November 2022.
Are wages keeping up with inflation?
No. Average hourly earnings grew 3.09% in August against inflation of 3.35%, a gap of 0.27 percentage points. Wage growth was 3.98% a year ago.
How do consumers feel about the economy?
Consumer sentiment was 51.7 in August, down from 55.2 in July and 58.2 a year ago. The low of the past two years was 44.8 in May. The next reading is due October 23.